C. Alcantara & Sons vs. CA, et al.

G.R. No. 155109 : March 14, 2012

1. NAGKAHIUSANG MAMUMUO SAALSONS-SPFL (NAMAAL-SPFL), AND ITS MEMBERS vs. C.
ALCANTARA & SONS, INC.,

Facts:

These cases were consolidated based on the following facts as follows:

C. Alcantara & Sons, Inc., (the Company) is a domestic corporation engaged in the manufacture and processing of
plywood. Nagkahiusang Mamumuo sa Alsons-SPFL (the Union) is the exclusive bargaining agent of the Companys rank
and file employees. The other parties to these cases are the Union officers[1] and their striking members.[2]

The Company and the Union entered into a Collective Bargaining Agreement (CBA) that bound them to hold no strike
and no lockout in the course of its life. At some point the parties began negotiating the economic provisions of their CBA
but this ended in a deadlock, prompting the Union to file a notice of strike. After efforts at conciliation by the Department
of Labor and Employment (DOLE) failed, the Union conducted a strike vote that resulted in an overwhelming majority of
its members favoring it. The Unionreported the strike vote to the DOLE and, after the observance of the mandatory
cooling-off period, went on strike.

The negotiation between CASI and the Union on the economic provisions of the CBA ended in a deadlock
prompting the Union to stage a strike, but the strike was later declared by the Labor Arbiter to be illegal in violation of the
CBAs no strike-no lockout provision. Consequently, the Union officers were deemed to have forfeited their employment
with the company and made them liable for actual damages plus interest and attorneys fees, while the Union members
were ordered to be reinstated without backwages there being no proof that they actually committed illegal acts during the
strike.

Notwithstanding the provision of the Labor Code mandating that the reinstatement aspect of the decision be
immediately executory, the LA refused to reinstate the dismissed Union members. On November 8, 1999, the NLRC
affirmed the LA decision insofar as it declared the strike illegal and ordered the Union officers dismissed from
employment and liable for damages but modified the same by considering the Union members to have been validly
dismissed from employment for committing prohibited and illegal acts.

On petition for certiorari, the CA annulled the NLRC decision and reinstated that of the LA. Aggrieved, CASI,
the Union and the Union officers and members elevated the matter to the Court.

During the pendency of the cases, the affected Union members (who were ordered reinstated) filed with the LA a
motion for reinstatement pending appeal and the computation of their backwages. But the LA awarded separation pay and
other benefits. On appeal, the NLRC denied the Union members claim for separation pay, accrued wages and other
benefits. When elevated to the CA, the appellate court held that reinstatement pending appeal applies only to illegal
dismissal cases under Article 223 of the Labor Code and not to cases under Article 263. Hence, the petition by the Union
and its officers and members in G.R. No. 179220.

The Court agreed with the CA on the illegality of the strike as well as the termination of the Union officers, but
disagreed with the CA insofar as it affirmed the reinstatement of the Union members. The Court, instead, sustained the
dismissal not only of the Union officers but also the Union members who, during the illegal strike, committed prohibited
acts by threatening, coercing, and intimidating non-striking employees, officers, suppliers and customers; obstructing the
free ingress to and egress from the company premises; and resisting and defying the implementation of the writ of
preliminary injunction issued against the strikers.

The Court further held that the terminated Union members, who were ordered reinstated by the LA, should have
been immediately reinstated due to the immediate executory nature of the reinstatement aspect of the LA decision. In
view, however, of CASIs failure to reinstate the dismissed employees, the Court ordered CASI to pay the terminated
Union members their accrued backwages from the date of the LA decision until the eventual reversal by the NLRC of the
order of reinstatement. In addition to the accrued backwages, the Court awarded separation pay as a form of financial
assistance to the Union members equivalent to one-half month salary for every year of service to the company up to the
date of their termination.

Hence, this motion for partial reconsideration by the petitioner.

Issue/s:

1. Whether or not the petitioner is liable to pay the accrued wages of the dismissed employees?

2. Whether or not the Court erred in awarding separation pay to the dismissed union officers and employees?

Ruling:

The motion for partial reconsideration is partly granted.

1. Article 264 (a) of the Labor Code provides for the liabilities of the Union officers and members participating in
illegal strikes and/or committing illegal acts. Thus, the said provision sanctions the dismissal of a Union officer who
knowingly participates in an illegal strike or who knowingly participates in the commission of illegal acts during a lawful
strike. In this case, the Union officers were in clear breach of the above provision of law when they knowingly
participated in the illegal strike.

As to the Union members, the same provision of law provides that a member is liable when he knowingly
participates in the commission of illegal acts during a strike. We find no reason to reverse the conclusion of the Court that
CASI presented substantial evidence to show that the striking Union members committed the following prohibited acts:
(a) They threatened, coerced, and intimidated non-striking employees, officers, suppliers and customers;(b) They
obstructed the free ingress to and egress from the company premises; and (c) They resisted and defied the implementation
of the writ of preliminary injunction issued against the strikers.

The commission of the above prohibited acts by the striking Union members warrants their dismissal from
employment.

Records show that the LA found the strike illegal and sustained the dismissal of the Union officers, but ordered
the reinstatement of the striking Union members for lack of evidence showing that they committed illegal acts during the
illegal strike. This decision, however, was later reversed by the NLRC. Pursuant to Article 223of the Labor Code and
well-established jurisprudence, the decision of the LA reinstating a dismissed or separated employee, insofar as the
reinstatement aspect is concerned, shall immediately be executory, pending appeal.[28]The employee shall either be
admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation, or, at the option
of the employee, merely reinstated in the payroll. It is obligatory on the part of the employer to reinstate and pay the
wages of the dismissed employee during the period of appeal until reversal by the higher court. If the employer fails to
exercise the option of re-admitting the employee to work or to reinstate him in the payroll, the employer must pay the
employees salaries during the period between the LAs order of reinstatement pending appeal and the resolution of the
higher court overturning that of the LA.

In this case, CASI is liable to pay the striking Union members their accrued wages for four months and nine days,
which is the period from the notice of the LAs order of reinstatement until the reversal thereof by the NLRC.

2. Separation pay may be given as a form of financial assistance when a worker is dismissed in cases such as the
installation of labor-saving devices, redundancy, retrenchment to prevent losses, closing or cessation of operation of the
establishment, or in case the employee was found to have been suffering from a disease such that his continued
employment is prohibited by law. It is a statutory right defined as the amount that an employee receives at the time of his
severance from the service and is designed to provide the employee with the wherewithal during the period that he is
looking for another employment. It is oriented towards the immediate future, the transitional period the dismissed
employee must undergo before locating a replacement job. As a general rule, when just causes for terminating the
services of an employee exist, the employee is not entitled to separation pay because lawbreakers should not benefit from
their illegal acts. The rule, however, is subject to exceptions.

In the case at bar, not only did the Court declare the strike illegal, rather, it also found the Union officers to have
knowingly participated in the illegal strike. Worse, the Union members committed prohibited acts during the strike. Thus,
the awards of separation pay as a form of financial assistance is deleted.

The motion for partial consideration by the petitioner is partly granted. The decision of the Court is partly reconsidered.

2. St. Marys Academy of Dipolog City vs. Teresita Palacio, et al.

G.R. No. 164913
September 8, 2010
Facts:
In the 1990s, Petitioner hired Respondents Calibod, Laquio, Santander, Saile Padilla, Andalahao, Decipulo and
Montederamos, as teachers, and respondent Palacio as guidance counselor. In accordance to DECS Memorandum No. 10,
S. 1998 pursuant to RA 7836, the Petitioner informed the respondents that they cannot be re-accepted for the school year
2000-2001 for not having passed the LET (Licensure Examinations for Teachers), nor can they continue with their
teaching profession. They filed a complaint contesting that their termination as highly irregular and premature. They
averred their right to security of tenure despite the requirements set by the PRC for they had special permits to teach and
the civil service eligibility required under the law. In addition to this, the deadline for teachers to register under the
Memorandum was set to 19 September 2000, but the petitioner decided to terminate them as early as 31 March 2000.
Lastly, the acceptance of the Petitioner of other teacher who do not also possess the required eligibility under the
Memorandum showed evident bad faith.
LA Decision: The LA adjudged the petitioner guilty of illegal dismissal. Thus, petitioner was ordered to reinstate the
respondents or to pay them separation pay at the rate of month wage for every year of service, plus limited backwages.
NLRC Decision: The NLRC upheld the LAs decision, stating that the grounds relied upon by the petitioner or dismiss the
respondents are not among those enumerated by the Labor Code and that the respondents are regular employees, who
cannot be removed without just cause.
CA Decision: The CA upheld both the decisions of the LA and the NLRC. It further held that the Petitioner should have
adopted a contingency plan if in case the respondents still have not complied with the aforementioned requirements when
the deadline has arrived. The CA also observed that the petitioners ulterior motive for the termination may have been the
result of a confrontation between the principal and the respondents. However, as regards to Padilla, Palacio, Andalahao
and Decipulo, the CA found them to be merely probationary; therefore, there is no illegal dismissal to speak of.
Issue/s:
Whether the dismissal of the respondents were premature because it was effected prior to the deadline set by the PRC to
acquire their license. Whether the respondents are entitled to backwages from March to 19 September 2000, because it is
only on such date that they were already dismissible for cause.
Ruling:
Yes. The Supreme Court agrees with the decisions of the LA, the NLRC and the CA. It is incumbent upon the Court to
afford full protection to labor. The law has provided a specific timeframe within which respondents could comply,
petitioner has no right to deny them of this privilege accorded to them by law. In so far as Palacio, Calibod, Laquio,
Santander and Montedramos are concerned, being dismissed on March 2000 was premature. However, Saile is not
qualified to take the LET, therefore, no prematurity is to speak of on her end. Petitioners intention and desire not to put
the students education and school operation in jeopardy is neither a decisive consideration for respondents termination
prior to the deadline set by law. The prejudice that respondents retention would cause to the schoold operation is only
trivial. Yes. The respondents are entitled to limited backwages computed from 31 March 2000 to September 2000 in favor
of Palacio, Calibod, Laquio, Santander and Montederamos. The Petitioner cannot possibly
presume that respondents could not timely comply with the requirements set by law.

3. SERRANO V. GALLANT MARITIME SERVICES, INC.

G.R. No. 167614
March 24, 2009
Facts:
Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd. (respondents) under a
Philippine Overseas Employment Administration (POEA)-approved Contract of Employment with the following terms
and conditions:
Duration of contract 12 months
Position Chief Officer
Basic monthly salary US$1,400.00
Hours of work 48.0 hours per week
Overtime US$700.00 per month
Vacation leave with pay 7.00 days per month

On March 19, 1998, the date of his departure, petitioner was constrained to accept a downgraded employment contract for
the position of Second Officer with a monthly salary of US$1,000.00, upon the assurance and representation of
respondents that he would be made Chief Officer by the end of April 1998.
Respondents did not deliver on their promise to make petitioner Chief Officer. Hence, petitioner refused to stay on as
Second Officer and was repatriated to the Philippines on May 26, 1998.
Petitioners employment contract was for a period of 12 months or from March 19, 1998 up to March 19, 1999, but at the
time of his repatriation on May 26, 1998, he had served only two (2) months and seven (7) days of his contract, leaving an
unexpired portion of nine (9) months and twenty-three (23) days.
Petitioner filed with the Labor Arbiter (LA) a Complaint against respondents for constructive dismissal and for payment
of his money claims in the total amount of US$26,442.73.
The LA rendered a Decision dated July 15, 1999, declaring the dismissal of petitioner illegal and awarding him monetary
benefits, to wit:
WHEREFORE, premises considered, judgment is hereby rendered declaring that the dismissal of the complainant
(petitioner) by the respondents in the above-entitled case was illegal and the respondents are hereby ordered to pay the
complainant [petitioner], jointly and severally, in Philippine Currency, based on the rate of exchange prevailing at the
time of payment, the amount of EIGHT THOUSAND SEVEN HUNDRED SEVENTY U.S. DOLLARS (US $8,770.00),
representing the complainants salary for three (3) months of the unexpired portion of the aforesaid contract of
employment.
The claims of the complainant for moral and exemplary damages are herey DISMISSED for lack of merit.
In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his computation on the salary period of three
months only rather than the entire unexpired portion of nine months and 23 days of petitioners employment contract
applying the subject clause. However, the LA applied the salary rate of US$2,590.00, consisting of petitioners [b]asic
salary, US$1,400.00/month + US$700.00/month, fixed overtime pay, + US$490.00/month, vacation leave pay =
US$2,590.00/compensation per month.
Respondents appealed to the National Labor Relations Commission (NLRC) to question the finding of the LA that
petitioner was illegally dismissed.
The NLRC modified the LA Decision and corrected the LAs computation of the lump-sum salary awarded to petitioner
by reducing the applicable salary rate from US$2,590.00 to US$1,400.00 because R.A. No. 8042 does not provide for the
award of overtime pay, which should be proven to have been actually performed, and for vacation leave pay.
Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality of the subject clause.
The NLRC denied the motion.
Petitioner filed a Petition for Certiorari with the CA, reiterating the constitutional challenge against the subject clause.
After initially dismissing the petition on a technicality, the CA eventually gave due course to it, as directed by this Court
in its Resolution which granted the petition for certiorari,filed by petitioner.
The CA affirmed the NLRC ruling on the reduction of the applicable salary rate; however, the CA skirted the
constitutional issue raised by petitioner.
His Motion for Reconsideration having been denied by the CA, petitioner brings his cause to this Court on the following
grounds:
The Court of Appeals and the labor tribunals have decided the case in a way not in accord with applicable decision of the
Supreme Court involving similar issue of granting unto the migrant worker back wages equal to the unexpired portion of
his contract of employment instead of limiting it to three (3) months.
Even without considering the constitutional limitations [of] Sec. 10 of Republic Act No. 8042, the Court of Appeals
gravely erred in law in excluding from petitioners award the overtime pay and vacation pay provided in his contract since
under the contract they form part of his salary.
The Court now takes up the full merit of the petition mindful of the extreme importance of the constitutional question
raised therein.

Issue/s:
Whether Section 10 (par 5) of RA 8042 is unconstitutional
Proper computation of the Lump-sum salary to be awarded to petitioner by reason of his illegal dismissal
Whether the overtime and leave pay should form part of the salary basis in the computation of his monetary award
The unanimous finding of the LA, NLRC and CA that the dismissal of petitioner was illegal is not disputed. Likewise not
disputed is the salary differential of US$45.00 awarded to petitioner in all three fora.
Applying the subject clause, the NLRC and the CA computed the lump-sum salary of petitioner at the monthly rate of
US$1,400.00 covering the period of three months out of the unexpired portion of nine months and 23 days of his
employment contract or a total of US$4,200.00.
Impugning the constitutionality of the subject clause, petitioner contends that, in addition to the US$4,200.00 awarded by
the NLRC and the CA, he is entitled to US$21,182.23 more or a total of US$25,382.23, equivalent to his salaries for the
entire nine months and 23 days left of his employment contract, computed at the monthly rate of US$2,590.00.31

Arguments of the Petitioner

For Antonio Serrano (petitioner), a Filipino seafarer, the last clause in the 5th paragraph of Section 10, Republic Act
(R.A.) No. 8042, violates the OFWs constitutional rights in that it impairs the terms of their contract, deprives them of
equal protection and denies them due process.

The Arguments of Respondents

Respondents contend that the constitutional issue should not be entertained, for this was belatedly interposed by petitioner
in his appeal before the CA, and not at the earliest opportunity, which was when he filed an appeal before the NLRC.

The Arguments of the Solicitor General

The Solicitor General (OSG)41 points out that as R.A. No. 8042 took effect on July 15, 1995, its provisions could not
have impaired petitioners 1998 employment contract. Rather, R.A. No. 8042 having preceded petitioners contract, the
provisions thereof are deemed part of the minimum terms of petitioners employment, especially on the matter of money
claims, as this was not stipulated upon by the parties.

Ruling:
First Issue
Does the subject clause violate Section 1, Article III of the Constitution, and Section 18, Article II and Section 3, Article
XIII on Labor as protected sector?
The answer is in the affirmative.
Section 1, Article III of the Constitution guarantees:
No person shall be deprived of life, liberty, or property without due process of law nor shall any person be denied the
equal protection of the law.
Section 18, Article II and Section 3, Article XIII accord all members of the labor sector, without distinction as to place of
deployment, full protection of their rights and welfare.
To Filipino workers, the rights guaranteed under the foregoing constitutional provisions translate to economic security and
parity: all monetary benefits should be equally enjoyed by workers of similar category, while all monetary obligations
should be borne by them in equal degree; none should be denied the protection of the laws which is enjoyed by, or spared
the burden imposed on, others in like circumstances.
Imbued with the same sense of obligation to afford protection to labor, the Court in the present case also employs the
standard of strict judicial scrutiny, for it perceives in the subject clause a suspect classification prejudicial to OFWs.
Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs. However, a closer
examination reveals that the subject clause has a discriminatory intent against, and an invidious impact on OFWs
The subject clause does not state or imply any definitive governmental purpose; and it is for that precise reason that the
clause violates not just petitioners right to equal protection, but also her right to substantive due process under Section 1,
Article III of the Constitution.
Second Issue
It is plain that prior to R.A. No. 8042, all OFWs, regardless of contract periods or the unexpired portions thereof, were
treated alike in terms of the computation of their monetary benefits in case of illegal dismissal. Their claims were
subjected to a uniform rule of computation: their basic salaries multiplied by the entire unexpired portion of their
employment contracts.
The enactment of the subject clause in R.A. No. 8042 introduced a differentiated rule of computation of the money claims
of illegally dismissed OFWs based on their employment periods, in the process singling out one category whose contracts
have an unexpired portion of one year or more and subjecting them to the peculiar disadvantage of having their monetary
awards limited to their salaries for 3 months or for the unexpired portion thereof, whichever is less, but all the while
sparing the other category from such prejudice, simply because the latters unexpired contracts fall short of one year.
Prior to R.A. No. 8042, a uniform system of computation of the monetary awards of illegally dismissed OFWs was in
place. This uniform system was applicable even to local workers with fixed-term employment.
The subject clause does not state or imply any definitive governmental purpose; and it is for that precise reason that
the clause violates not just petitioners right to equal protection, but also her right to substantive due process under Section
1, Article III of the Constitution.
The subject clause being unconstitutional, petitioner is entitled to his salaries for the entire unexpired period of nine
months and 23 days of his employment contract, pursuant to law and jurisprudence prior to the enactment of R.A. No.
8042.
Third Issue
Petitioner contends that his overtime and leave pay should form part of the salary basis in the computation of his monetary
award, because these are fixed benefits that have been stipulated into his contract.
Petitioner is mistaken.
The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers like petitioner, DOLE
Department Order No. 33, series 1996, provides a Standard Employment Contract of Seafarers, in which salary is
understood as the basic wage, exclusive of overtime, leave pay and other bonuses; whereas overtime pay is compensation
for all work performed in excess of the regular eight hours, and holiday pay is compensation for any work performed
on designated rest days and holidays.
In the same vein, the claim for the days leave pay for the unexpired portion of the contract is unwarranted since the same
is given during the actual service of the seamen.
WHEREFORE, the Court GRANTS the Petition. The subject clause or for three months for every year of the unexpired
term, whichever is less in the 5th paragraph of Section 10 of Republic Act No. 8042 is DECLARED
UNCONSTITUTIONAL; and the December 8, 2004 Decision and April 1, 2005 Resolution of the Court of Appeals are
MODIFIED to the effect that petitioner is AWARDED his salaries for the entire unexpired portion of his employment
contract consisting of nine months and 23 days computed at the rate of US$1,400.00 per month.
xxxxxxxxxx

4. Ledesma Jr. vs. NLRC

G.R. No. 174585

Facts:
Herein petitioner was employed as a bus/service driver by the private respondent on probationary basis on December
4,1998. Ledesma was required to report at private respondents training site in Dasmarias, Cavite, under the direct
supervision of its site administrator, Pablo Manolo de Leon.

Ledesma filed a complaint against de Leon for allegedly abusing his authority as site administrator by using the private
respondents vehicles and other facilities for personal ends. In the same complaint, he also accused de Leon of immoral
conduct allegedly carried out within the private respondents premises.
De Leon also filed a written report against Ledesma addressed to private respondents Vice-President for Administration,
Ricky Ty, citing his suspected drug use.

In view of de Leons report, private respondents Human Resource Manager, Trina Cueva (HR Manager Cueva), served a
copy of a Notice to petitioner requiring him to explain within 24 hours why no disciplinary action should be imposed on
him for allegedly violating Section 14, Article IV of the private respondents Code of Conduct.[6]

Petitioner filed a complaint for illegal dismissal against private respondent before the Labor Arbiter.

Ledesma averred that in view of the complaint he filed against de Leon for his abusive conduct as site administrator, the
latter retaliated by falsely accusing him as a drug user. VP for Administration Ty, however, instead of verifying the
veracity of de Leons report, readily believed his allegations and together with HR Manager Cueva, verbally dismissed
Ledesma from service.

Petitioner alleged that he was asked to report at private respondents main office. There, petitioner was served by HR
Manager Cueva a copy of the Notice to Explain together with the copy of de Leons report citing his suspected drug
use. After he was made to receive the copies of the said notice and report, HR Manager Cueva went inside the office of
VP for Administration Ty. After a while, HR Manager Cueva came out of the office with VP for Administration Ty. To
petitioners surprise, HR Manager Cueva took back the earlier Notice to Explain given to him and flatly declared that there
was no more need for the petitioner to explain since his drug test result revealed that he was positive for drugs. When
petitioner, however, asked for a copy of the said drug test result, HR Manager Cueva told him that it was with the
companys president, but she would also later claim that the drug test result was already with the proper authorities
at Camp Crame.[8]

Petitioner was then asked by HR Manager Cueva to sign a resignation letter and also remarked that whether or not
petitioner would resign willingly, he was no longer considered an employee of private respondent. All these events
transpired in the presence of VP for Administration Ty, who even convinced petitioner to just voluntarily resign with the
assurance that he would still be given separation pay. Petitioner did not yet sign the resignation letter replying that he
needed time to think over the offers. When petitioner went back to private respondents training site in Dasmarias, Cavite,
to get his bicycle, he was no longer allowed by the guard to enter the premises.[9]

On the following day, petitioner immediately went to St. Dominic Medical Center for a drug test and he was found
negative for any drug substance. With his drug result on hand, petitioner went back to private respondents main office
in Manila to talk to VP for Administration Ty and HR Manager Cueva and to show to them his drug test result.Petitioner
then told VP for Administration Ty and HR Manager Cueva that since his drug test proved that he was not guilty of the
drug use charge against him, he decided to continue to work for the private respondent.[10]

Ledesma reported for work but he was no longer allowed to enter the training site for he was allegedly
banned therefrom according to the guard on duty. This incident prompted the petitioner to file the complaint for illegal
dismissal against the private respondent before the Labor Arbiter.

For its part, private respondent countered that petitioner was never dismissed from employment but merely served a
Notice to Explain why no disciplinary action should be filed against him in view of his superiors report that he was
suspected of using illegal drugs. Instead of filing an answer to the said notice, however, petitioner prematurely lodged a
complaint for illegal dismissal against private respondent before the Labor Arbiter.[11]

Private respondent likewise denied petitioners allegations that it banned the latter from entering private respondents
premises. Rather, it was petitioner who failed or refused to report to work after he was made to explain his alleged drug
use. Indeed, on 3 December 2000, petitioner was able to claim at the training site his salary for the period of 16-30
November 2000, as evidenced by a copy of the pay voucher bearing petitioners signature. Petitioners accusation that he
was no longer allowed to enter the training site was further belied by the fact that he was able to claim his 13th month pay
thereat on 9 December 2000, supported by a copy of the pay voucher signed by petitioner.[12]

On 26 July 2002, the Labor Arbiter rendered a Decision,[13] in favor of the petitioner declaring illegal his separation from
employment. The Labor Arbiter, however, did not order petitioners reinstatement for the same was no longer practical,
and only directed private respondent to pay petitioner backwages.

Both parties questioned the Labor Arbiters Decision before the NLRC. Petitioner assailed the portion of the Labor
Arbiters Decision denying his prayer for reinstatement, and arguing that the doctrine of strained relations is applied only
to confidential employees and his position as a driver was not covered by such prohibition.[15] On the other hand, private
respondent controverted the Labor Arbiters finding that petitioner was illegally dismissed from employment, and insisted
that petitioner was never dismissed from his job but failed to report to work after he was asked to explain regarding his
suspected drug use.[16]

Issue:
Whether the petitioner was illegally dismissed from employment.
Ruling:
The Labor Arbiter found that the petitioner was illegally dismissed from employment warranting the payment of
his backwages. The NLRC and the Court of Appeals found otherwise.

In reversing the Labor Arbiters Decision, the NLRC underscored the settled evidentiary rule that before the burden of
proof shifts to the employer to prove the validity of the employees dismissal, the employee must first sufficiently establish
that he was indeed dismissed from employment. The petitioner, in the present case, failed to establish the fact of his
dismissal. The NLRC did not give credence to petitioners allegation that he was banned by the private respondent from
entering the workplace, opining that had it been true that petitioner was no longer allowed to enter the training site when
he reported for work thereat on 2 December 2000, it is quite a wonder he was able to do so the very next day, on 3
December 2000, to claim his salary.

Well-entrenched is the principle that in order to establish a case before judicial and quasi-administrative bodies, it is
necessary that allegations must be supported by substantial evidence.[28] Substantial evidence is more than a mere
scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[29]

In the present case, there is hardly any evidence on record so as to meet the quantum of evidence required, i.e., substantial
evidence. Petitioners claim of illegal dismissal is supported by no other than his own bare, uncorroborated and, thus, self-
serving allegations, which are also incoherent, inconsistent and contradictory.

Petitioner himself narrated that when his presence was requested on 29 November 2000 at the private respondents main
office where he was served with the Notice to Explain his superiors report on his suspected drug use, VP for
Administration Ty offered him separation pay if he will just voluntarily resign from employment. While we do not
condone such an offer, neither can we construe that petitioner was dismissed at that instance. Petitioner was only being
given the option to either resign and receive his separation pay or not to resign but face the possible disciplinary charges
against him. The final decision, therefore, whether to voluntarily resign or to continue working still, ultimately rests with
the petitioner. In fact, by petitoners own admission, he requested from VP for Administration Ty more time to think over
the offer.

Moreover, the petitioner alleged that he was not allowed to enter the training site by the guard on duty who told him that
he was already banned from the premises.Subsequently, however, petitioner admitted in his Supplemental Affidavit that
he was able to return to the said site on 3 December 2000, to claim his 16-30 November 2000 salary, and again on 9
December 2000, to receive his 13th month pay. The fact alone that he was able to return to the training site to claim his
salary and benefits raises doubt as to his purported ban from the premises.

It is true that the Constitution affords full protection to labor, and that in light of this Constitutional mandate, we must be
vigilant in striking down any attempt of the management to exploit or oppress the working class. However, it does not
mean that we are bound to uphold the working class in every labor dispute brought before this Court for our resolution.

The law in protecting the rights of the employees, authorizes neither oppression nor self-destruction of the employer. It
should be made clear that when the law tilts the scales of justice in favor of labor, it is in recognition of the inherent
economic inequality between labor and management. The intent is to balance the scales of justice; to put the two parties
on relatively equal positions. There may be cases where the circumstances warrant favoring labor over the interests of
management but never should the scale be so tilted if the result is an injustice to the
employer. Justitia nemini neganda est -- justice is to be denied to none.

5. Philippine Association of Service Exporters vs. Drilon

G.R. No. L-81958
June 30, 1988

Facts:
The petitioner, Philippine Association of Service Exporters, Inc. (PASEI, for short), a firm "engaged principally in
the recruitment of Filipino workers, male and female, for overseas placement," challenges the Constitutional validity of
Department Order No. 1, Series of 1988, of the Department of Labor and Employment, in the character of "GUIDELINES
GOVERNING THE TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC AND
HOUSEHOLD WORKERS," in this petition for certiorari and prohibition. The measure is assailed for "discrimination
against males or females," that it 'does not apply to all Filipino workers but only to domestic helpers and females with
similar skills," and that it is violative of the right to travel. It was likewise held to be an invalid exercise of the lawmaking
power, police power being legislative, and not executive, in character.

In its supplement to the petition, PASEI invokes Section 3, of Article XIII, of the Constitution, providing for
worker participation "in policy and decision-making processes affecting their rights and benefits as may be provided by
law." In addition, it was contended that Department Order No. 1 was passed in the absence of prior consultations. It was
claimed to be in violation of the Charter's non-impairment clause, in addition to the "great and irreparable injury" that
PASEI members face should the Order be further enforced.

The Solicitor General, on behalf of the respondent Secretary of Labor and Administrator of the Philippine Overseas
Employment Administration, invokes the police power of the Philippine State.

Issue:
Whether or not deployment ban for female domestic helpers is valid under our Constitution.

Held:
Yes. It is a valid exercise of police power. The concept of police power is well-established in this jurisdiction. It has been
defined as the "state authority to enact legislation that may interfere with personal liberty or property in order to promote
the general welfare." As defined, it consists of (1) an imposition of restraint upon liberty or property, (2) in order to foster
the common good. It is not capable of an exact definition but has been, purposely, veiled in general terms to underscore its
all-comprehensive embrace.

"Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future where it could be done,
provides enough room for an efficient and flexible response to conditions and circumstances thus assuring the greatest
benefits."

It constitutes an implied limitation on the Bill of Rights. According to Fernando, it is "rooted in the conception that men in
organizing the state and imposing upon its government limitations to safeguard constitutional rights did not intend thereby
to enable an individual citizen or a group of citizens to obstruct unreasonably the enactment of such salutary measures
calculated to ensure communal peace, safety, good order, and welfare." Significantly, the Bill of Rights itself does not
purport to be an absolute guaranty of individual rights and liberties "Even liberty itself, the greatest of all rights, is not
unrestricted license to act according to one's will." It is subject to the far more overriding demands and requirements of
the greater number.
6. xxxxxxxxxxxxxxxxxx

6. [G.R. No. L-49280. April 30, 1980.]

LUZ G. CRISTOBAL, Petitioner, v. EMPLOYEES COMPENSATION COMMISSION and GOVERNMENT

SERVICE INSURANCE SYSTEM (National Science Development Board); respondents.

FACTS:

Fortunato Cristobal, husband of petitioner, was employed as Supervising Information officer II of the National
Science Development Board (NSDB). He died due to rectal malignancy on May 27, 1977. Following his death, petitioner
filed with the GSIS a claim for income (death) benefit under PD 626.

GSIS denied the claim ruling that certain diseases to be compensable whenever the claimant is able to prove
that the risks of contracting such diseases were increased by the working conditions attendant to the deceaseds
employment. This is provided under Sec. 1(b) Pule III of the Rules and Regulations Implementing Presidential Decree
No. 626 As far as the degree of proof is concerned, the claimant must be able to show at least by substantial evidence
that the development of the ailment was brought largely by the working conditions present in the nature of employment.

Added further, since Rectal Malignancy is not listed as an occupational disease, therefore, the claim required such
degree of proof as mentioned above. On the basis, however, of the papers and evidence on record submitted, it appears
that the deceaseds employment did not have any direct causal relationship with the contraction of the ailment.

On appeal to ECC, the latter affirmed GSIS.

ISSUE: Whether the death of petitioners husband is compensable

HELD: YES.

Section 1(b), Rule III of the Implementing Rules and regulations of P.D. 626 provides

"For sickness and the resulting disability or death to be compensable, the sickness must be the result of an
occupational disease listed under Annex A of these Rules with the conditions set therein satisfied otherwise,
proof must he shown that the risk of contracting the disease is increased by the working conditions."

In the case of Sepulveda v. Employees Compensation Commission (84 SCRA 771 [August 25, 1978]), this Court
stated that

". . . the respondent Commission (ECC), under Resolution No. 223 dated March 16, 1977, adopted, as a policy,
the institution of a more compassionate interpretation of the restrictive provisions of Presidential Decree
No. 626, as amended, by its administering agencies, the Social Security System and the Government Service
Insurance System, with respect to, among others, Myocardial Infarction and other borderline cases. . . ."cra

The deceased, as Supervising Officer II of the NSDB, was actually assigned to the Printing Department of the
said agency where he was exposed to various chemicals and intense heat. This fact was corroborated by the affidavit of
one Angel Peres, a co-employee of the deceased. The statements therein find relevance in the medical certificate issued by
Dr. Rufo A. Guzman stating that "the illness may be aggravated by the unhygienic conditions in the Bureau of Printing
where he works. Handling of chemicals for printing, eating without proper washing of hands, tension due to the pressure
of work, plus neglected personal necessity which may be attributed to the inadequate facilities in the Bureau of Printing".

Undisputed is the fact that the deceased entered the government free from any kind of disease. Likewise, it is
admitted that the deceased husbands ailment supervened in the course of his employment with the NSDB.

In the instant case, it is evident that rectal cancer is one of those borderline cases. Like, it is clear that the purpose
of the resolution is to extend the applicability of the provisions of P.D. 626, thereby affording a greater number of
employees the opportunity to avail of the benefits under the law. This is in consonance with the avowed policy of the
State, as mandated by the Constitution and embodied in the New Labor Code, to give maximum aid and protection to
labor. The Employees Compensation Commission, like the defunct Court of Industrial Relations and the Workmens
Compensation Commission, is under obligation at all times to give meaning and substance to the constitutional guarantees
in favor of the working man, more specially, the social justice guarantee; for otherwise, these guarantees would be merely
"a lot of meaningless patter.

7. Ang Tibay vs. CIR

G.R. No. L-46496
Facts:
Ang Tibay was a manufacturer of rubber slippers. There was a shortage of leather soles, and it was necessary to
temporarily lay off members of the National Labor Union. According to the Union however, this was merely a scheme to
systematically terminate the employees from work, and that the shortage of soles is unsupported. It claims that Ang Tibay
is guilty of unjust labor practice because the owner, Teodoro, is discriminating against the National Labor Union, and
unjustly favoring the National Workers Brotherhood, which was allegedly sympathetic to the employer. The Court of
Industrial Relation decided the case and elevated it to the Supreme Court, but a motion for new trial was raised by the
NLU. But the Ang Tibay filed a motion for opposing the said motion. The motion for new trial was raised because
according to NLU, there are documents that are so inaccessible to them that even with the exercise of due diligence they
could not be expected to have obtained them and offered as evidence in the Court of Industrial Relations. That these
documents, which NLU have now attached as exhibits are of such far-reaching importance and effect that their admission
would necessarily mean the modification and reversal of the judgment rendered therein.
Issue:
Whether or Not the union was denied due process by CIR.
Ruling:
To begin with the issue before us is to realize the functions of the CIR. The CIR is a special court whose functions are
specifically stated in the law of its creation which is the Commonwealth Act No. 103). It is more an administrative board
than a part of the integrated judicial system of the nation. It is not intended to be a mere receptive organ of the
government. Unlike a court of justice which is essentially passive, acting only when its jurisdiction is invoked and
deciding only cases that are presented to it by the party litigant, the function of the CIR, as will appear from perusal of its
organic law is more active, affirmative and dynamic. It not only exercises judicial or quasi-judicial functions in the
determination of disputes between employers and employees but its functions are far more comprehensive and extensive.
It has jurisdiction over the entire Philippines, to consider, investigate, decide, and settle any question, matter controversy
or disputes arising between, and/ or affecting employers and employees or laborers, and landlords and tenants or farm-
laborers, and regulates the relations between them, subject to, and in accordance with, the provisions of CA 103. SC had
the occasion to point out that the CIR is not narrowly constrained by technical rules of procedure, and equity and
substantial merits of the case, without regard to technicalities or legal forms and shall not be bound by any technical rules
of legal evidence but may inform its mind in such manner as it may deem just and equitable. The fact, however, that the
CIR may be said to be free from rigidity of certain procedural requirements does not mean that it can in justiciable cases
coming before it, entirely ignore or disregard the fundamental and essential requirements of due process in trials and
investigations of an administrative character.
There are cardinal primary rights which must be respected even in proceedings of this character: (1) the right to a hearing,
which includes the right to present one's cause and submit evidence in support thereof; (2) The tribunal must consider the
evidence presented; (3) The decision must have something to support itself; (4) The evidence must be substantial; (5) The
decision must be based on the evidence presented at the hearing; or at least contained in the record and disclosed to the
parties affected; (6) The tribunal or body or any of its judges must act on its own independent consideration of the law and
facts of the controversy, and not simply accept the views of a subordinate; (7) The Board or body should, in all
controversial questions, render its decision in such manner that the parties to the proceeding can know the various Issue
involved, and the reason for the decision rendered. SC said there was a failure to grasp the fundamental issue involved
due to failure to receive all relevant evidence.
Thus, the motion for a new trial was granted and the entire record of this case is remanded to the CIR.

Topic: Bases of Labor Laws

8. Calalang vs. Williams

70 Phil 726

Facts:

Maximo Calalang, in his capacity as a private citizen and as a taxpayer of Manila, brought before the court a petition
for a writ of prohibition against respondents, among them, A. D. Williams, as Chairman of the National Traffic Commission.
It is alleged that the National Traffic Commission, in its resolution of July 17, 1940, resolved to recommend to the
Director of Public Works and the Secretary of Public Works and Communications that animal-drawn vehicles be prohibited
from passing along Rosario Street (from 7:30 a.m. to 12:30 p.m. and from 1:30 p.m. to 5:30 p.m.) and along Rizal Avenue
(from 7 a.m. to 11 p.m.), from a period of one year from the date of the opening of the Colgante Bridge to traffic. The
Director of Public Works. With the adoption of the recommendation, the Mayor of Manila and the Acting Chief of Police
of Manila have enforced the same and, as a consequence, all animal-drawn vehicles are not allowed to pass and pick up
passengers in the indicated places.
The measure was adopted pursuant of the provisions of Commonwealth Act No. 548 which authorizesthe Director
of Public Works, with the approval of the Secretary of Public Works and Communications, to promulgate rules and
regulations to regulate and control the use of and traffic on national roads.
Petitioner contends that Commonwealth Act No. 548 is unconstitutional because (a) it constitutes an undue
delegation of legislative power, and (b) it constitutes an unlawful interference with legitimate business or trade and abridge
the right to personal liberty and freedom of locomotion

Section 1 of Commonwealth Act No. 548 reads as follows:

"SECTION 1. To promote safe transit upon, and avoid obstructions on, roads and streets designated as national roads by
acts of the National Assembly or by executive orders of the President of the Philippines, the Director of Public Works, with
the approval of the Secretary of Public Works and Communications, shall promulgate the necessary rules and regulations
to regulate and control the use of and traffic on such roads and streets. Such rules and regulations, with the approval of the
President, may contain provisions controlling or regulating the construction of buildings or other structures within a
reasonable distance from along the national roads. Such roads may be temporarily closed to any or all classes of traffic by
the Director of Public Works and his duly authorized representatives whenever the condition of the road or the traffic thereon
makes such action necessary or advisable in the public convenience and interest, or for a specified period, with the approval
of the Secretary of Public Works and Communications."

Issue:
1. Whether or not Commonwealth Act No. 548 constitutes an undue delegation of legislative power?
2. Whether or not CA No. 548 is a valid police power measure?
3. Whether or not CA No. 548 violates social justice?

Held:
1. No.
Section 1 of Commonwealth Act No. 548 does not confer legislative power upon the Director of Public Works and
the Secretary of Public Works and Communications. The authority therein conferred upon them and under which they
promulgated the rules and regulations, is not to determine what public policy demands but merely to carry out the legislative
policy laid down by the National Assembly in said Act, to wit, "to promote safe transit upon and avoid obstructions on,
roads and streets designated as national roads by acts of the National Assembly or by executive orders of the President of
the Philippines" and to close them temporarily to any or all classes of traffic "whenever the condition of the road or the
traffic makes such action necessary or advisable in the public convenience and interest."
2. No.
Commonwealth Act No. 548 aims to promote safe transit upon and avoid obstructions on national roads, in the
interest and convenience of the public. In enacting said law, therefore, the National Assembly was prompted by
considerations of public convenience and welfare. It was inspired by a desire to relieve congestion of traffic, which is, to
say the least, a menace to public safety. Public welfare, then, lies at the bottom of the enactment of said law, and the state
in order to promote the general welfare may interfere with personal liberty, with property, and with business and
occupations. Persons and property may be subjected to all kinds of restraints and burdens, in order to secure the general
comfort, health, and prosperity of the state.

3. No.
The petitioner finally avers that the rules and regulations complained of infringe upon the constitutional
precept regarding the promotion of social justice to insure the well-being and economic security of all the people.
The promotion of social justice, however, is to be achieved not through a mistaken sympathy towards any given
group. Social justice is "neither communism, nor despotism, nor atomism, nor anarchy," but the humanization of laws and
the equalization of social and economic forces by the State so that justice in its rational and objectively secular conception
may at least be approximated. Social justice means the promotion of the welfare of all the people, the adoption by the
Government of measures calculated to insure economic stability of all the competent elements of society, through the
maintenance of a proper economic and social equilibrium in the interrelations of the members of the community,
constitutionally, through the adoption of measures legally justifiable, or extra-constitutionally, through the exercise of
powers underlying the existence of all governments on the time-honored principle of salus populi est
suprema lex.
Social justice, therefore, must be founded on the recognition of the necessity of interdependence among divers and
diverse units of a society and of the protection that should be equally and evenly extended to all groups as a combined force
in our social and economic life, consistent with the fundamental and paramount objective of the state of promoting the
health, comfort, and quiet of all persons, and of bringing about "the greatest good to the greatest number."

9. SMART COMM VS ASTORGA

Facts:
Regina M. Astorga (Astorga) was employed by respondent SMART on May 8, 1997 as District Sales Manager of the
Corporate Sales Marketing Group/ Fixed Services Division (CSMG/FSD).

In February 1998, SMART launched an organizational realignment to achieve more efficient operations. This was made
known to the employees. Part of the reorganization was the outsourcing of the marketing and sales force. Thus, SMART
entered into a joint venture agreement with NTT of Japan, and formed SMART-NTT Multimedia, Incorporated (SNMI).
Since SNMI was formed to do the sales and marketing work, SMART abolished the CSMG/FSD, Astorgas division.

To soften the blow of the realignment, SNMI agreed to absorb the CSMG personnel who would be recommended by
SMART. SMART then conducted a performance evaluation of CSMG personnel and those who garnered the highest ratings
were favorably recommended to SNMI. Astorga landed last in the performance evaluation, thus, she was not recommended
by SMART. SMART, nonetheless, offered her a supervisory position in the Customer Care Department, but she refused the
offer because the position carried lower salary rank and rate.

Despite the abolition of the CSMG/FSD, Astorga continued reporting for work. But on March 3, 1998, SMART issued a
memorandum advising Astorga of the termination of her employment on ground of redundancy, effective April 3, 1998.
Astorga received it on March 16, 1998.

The termination of her employment prompted Astorga to file a Complaint for illegal dismissal, non-payment of salaries and
other benefits with prayer for moral and exemplary damages against SMART and Ann Margaret V. Santiago (Santiago). She
claimed that abolishing CSMG and, consequently, terminating her employment was illegal for it violated her right to security
of tenure. She also posited that it was illegal for an employer, like SMART, to contract out services which will displace the
employees, especially if the contractor is an in-house agency.

SMART responded that there was valid termination. It argued that Astorga was dismissed by reason of redundancy, which
is an authorized cause for termination of employment, and the dismissal was effected in accordance with the requirements
of the Labor Code. The redundancy of Astorgas position was the result of the abolition of CSMG and the creation of a
specialized and more technically equipped SNMI, which is a valid and legitimate exercise of management prerogative.

Issue:

WON the dismissal of Astorga is valid.

Ruling:

YES. Astorgas dismissal is founded upon authorized cause.

Astorga was terminated due to redundancy, which is one of the authorized causes for the dismissal of an employee. The
nature of redundancy as an authorized cause for dismissal is explained in the leading case of Wiltshire File Co., Inc. v.
National Labor Relations Commission, viz:

x x x redundancy in an employers personnel force necessarily or even ordinarily refers to duplication of work. That no other
person was holding the same position that private respondent held prior to termination of his services does not show that
his position had not become redundant. Indeed, in any well organized business enterprise, it would be surprising to find
duplication of work and two (2) or more people doing the work of one person. We believe that redundancy, for purposes of
the Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual
requirements of the enterprise. Succinctly put, a position is redundant where it is superfluous, and superfluity of a position
or positions may be the outcome of a number of factors, such as overhiring of workers, decreased volume of business, or
dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise.

The characterization of an employees services as superfluous or no longer necessary and, therefore, properly terminable, is
an exercise of business judgment on the part of the employer. The wisdom and soundness of such characterization or decision
is not subject to discretionary review provided, of course, that a violation of law or arbitrary or malicious action is not
shown.
Astorga claims that the termination of her employment was illegal and tainted with bad faith. She asserts that the
reorganization was done in order to get rid of her. But except for her barefaced allegation, no convincing evidence was
offered to prove it. This Court finds it extremely difficult to believe that SMART would enter into a joint venture agreement
with NTT, form SNMI and abolish CSMG/FSD simply for the sole purpose of easing out a particular employee, such as
Astorga. Moreover, Astorga never denied that SMART offered her a supervisory position in the Customer Care Department,
but she refused the offer because the position carried a lower salary rank and rate. If indeed SMART simply wanted to get
rid of her, it would not have offered her a position in any department in the enterprise.

Astorga also states that the justification advanced by SMART is not true because there was no compelling economic reason
for redundancy. But contrary to her claim, an employer is not precluded from adopting a new policy conducive to a more
economical and effective management even if it is not experiencing economic reverses. Neither does the law require that
the employer should suffer financial losses before he can terminate the services of the employee on the ground of
redundancy.

We agree with the CA that the organizational realignment introduced by SMART, which culminated in the abolition of
CSMG/FSD and termination of Astorgas employment was an honest effort to make SMARTs sales and marketing
departments more efficient and competitive. As the CA had taken pains to elucidate:

x x x a careful and assiduous review of the records will yield no other conclusion than that the reorganization undertaken
by SMART is for no purpose other than its declared objective as a labor and cost savings device. Indeed, this Court finds
no fault in SMARTs decision to outsource the corporate sales market to SNMI in order to attain greater productivity.
[Astorga] belonged to the Sales Marketing Group under the Fixed Services Division (CSMG/FSD), a distinct sales force of
SMART in charge of selling SMARTs telecommunications services to the corporate market. SMART, to ensure it can
respond quickly, efficiently and flexibly to its customers requirement, abolished CSMG/FSD and shortly thereafter assigned
its functions to newly-created SNMI Multimedia Incorporated, a joint venture company of SMART and NTT of Japan, for
the reason that CSMG/FSD does not have the necessary technical expertise required for the value added services. By
transferring the duties of CSMG/FSD to SNMI, SMART has created a more competent and specialized organization to
perform the work required for corporate accounts. It is also relieved SMART of all administrative costs management, time
and money-needed in maintaining the CSMG/FSD. The determination to outsource the duties of the CSMG/FSD to SNMI
was, to Our mind, a sound business judgment based on relevant criteria and is therefore a legitimate exercise of management
prerogative.

Indeed, out of our concern for those lesser circumstanced in life, this Court has inclined towards the worker and upheld his
cause in most of his conflicts with his employer. This favored treatment is consonant with the social justice policy of the
Constitution. But while tilting the scales of justice in favor of workers, the fundamental law also guarantees the right of the
employer to reasonable returns for his investment. In this light, we must acknowledge the prerogative of the employer to
adopt such measures as will promote greater efficiency, reduce overhead costs and enhance prospects of economic gains,
albeit always within the framework of existing laws. Accordingly, we sustain the reorganization and redundancy program
undertaken by SMART.

However, as aptly found by the CA, SMART failed to comply with the mandated one (1) month notice prior to termination.
The record is clear that Astorga received the notice of termination only on March 16, 1998 or less than a month prior to its
effectivity on April 3, 1998. Likewise, the Department of Labor and Employment was notified of the redundancy program
only on March 6, 1998.

Article 283 of the Labor Code clearly provides:

Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any
employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one
(1) month before the intended date thereof x x x.

SMARTs assertion that Astorga cannot complain of lack of notice because the organizational realignment was made known
to all the employees as early as February 1998 fails to persuade. Astorgas actual knowledge of the reorganization cannot
replace the formal and written notice required by the law. In the written notice, the employees are informed of the specific
date of the termination, at least a month prior to the effectivity of such termination, to give them sufficient time to find other
suitable employment or to make whatever arrangements are needed to cushion the impact of termination. In this case,
notwithstanding Astorgas knowledge of the reorganization, she remained uncertain about the status of her employment until
SMART gave her formal notice of termination. But such notice was received by Astorga barely two (2) weeks before the
effective date of termination, a period very much shorter than that required by law.

Be that as it may, this procedural infirmity would not render the termination of Astorgas employment illegal. The validity
of termination can exist independently of the procedural infirmity of the dismissal.

The CA, therefore, committed no reversible error in sustaining Astorgas dismissal and at the same time, awarding indemnity
for violation of Astorga's statutory rights.

However, we find the need to modify, by increasing, the indemnity awarded by the CA to Astorga, as a sanction on SMART
for non-compliance with the one-month mandatory notice requirement, in light of our ruling in Jaka Food Processing
Corporation v. Pacot, viz.:

[I]f the dismissal is based on a just cause under Article 282 but the employer failed to comply with the notice requirement,
the sanction to be imposed upon him should be tempered because the dismissal process was, in effect, initiated by an act
imputable to the employee, and (2) if the dismissal is based on an authorized cause under Article 283 but the employer failed
to comply with the notice requirement, the sanction should be stiffer because the dismissal process was initiated by the
employers exercise of his management prerogative.

We deem it proper to increase the amount of the penalty on SMART to P50,000.00.

As provided in Article 283 of the Labor Code, Astorga is, likewise, entitled to separation pay equivalent to at least one (1)
month salary or to at least one (1) months pay for every year of service, whichever is higher. The records show that Astorgas
length of service is less than a year. She is, therefore, also entitled to separation pay equivalent to one (1) month pay.

However, the award of backwages to Astorga by the CA should be deleted for lack of basis. Backwages is a relief given to
an illegally dismissed employee. Thus, before backwages may be granted, there must be a finding of unjust or illegal
dismissal from work. Since Astorgas dismissal is for an authorized cause, she is not entitled to backwages. The CAs
award of backwages is totally inconsistent with its finding of valid dismissal

10. Mansion Printing Center vs Bitara, Jr.

G.R. No. 168120 January 25, 2012
Facts:
Petitioners engaged the services of respondent as a helper (kargador). Respondent was later promoted as the
companys sole driver tasked to pick-up raw materials for the printing business, collect account receivables and deliver the
products to the clients within the delivery schedules.
Petitioners aver that the timely delivery of the products to the clients is one of the foremost considerations materials
to the operation of the business.It being so, they closely monitored the attendance of respondent. They noted his habitual
tardiness and absenteeism.
Thus, petitioners issued a Memorandum requiring respondent to submit a written explanation why no administrative
sanction should be imposed on him for his habitual tardiness.
Despite respondents undertaking to report on time, however, he continued to disregard attendance policies.
Consequently, Davis Cheng, General Manager of the company and son of petitioner Cheng, issued another
Memorandum(Notice to Explain) requiring respondent to explain why his services should not be terminated. He personally
handed the Notice to Explain to respondent but the latter, after reading the directive, refused to acknowledge receipt
thereof.He did not submit any explanation and, thereafter, never reported for work.
Davis Cheng personally served another Memorandum(Notice of Termination) upon him informing him that the
company found him grossly negligent of his duties, for which reason, his services were terminated.
On even date, respondent met with the management requesting for reconsideration of his termination from the
service. However, after hearing his position, the management decided to implement the Memorandum. Nevertheless, the
management, out of generosity, offered respondent financial assistance in the amount ofP6,110.00 equivalent to his one
month salary. Respondent demanded that he be given the amount equivalent to two (2) months salary but the management
declined as it believed it would, in effect, reward respondent for being negligent of his duties.
Respondent filed a complaint for illegal dismissal against the petitioners.

.
Issue:
Whether or not respondent is illegally dismissed?

Held:
No.
In order to validly dismiss an employee, the employer is required to observe both substantive and procedural aspects
the termination of employment must be based on a just or authorized cause of dismissal and the dismissal must be effected
after due notice and hearing.
We, therefore, agree with the Labor Arbiters findings, to wit:

The imputed absence and tardiness of the complainant are documented. He faltered on his attendance 38 times of
the 66 working days. His last absences on 11, 13, 14, 15 and 16 March 2000 were undertaken without even notice/permission
from management. These attendance delinquencies may be characterized as habitual and are sufficient justifications to
terminate the complainants employment.

We cannot simply tolerate injustice to employers if only to protect the welfare of undeserving employees. As aptly put by
then Associate Justice Leonardo A. Quisumbing:

Needless to say, so irresponsible an employee like petitioner does not deserve a place in the workplace, and it is within the
managements prerogative xxx to terminate his employment. Even as the law is solicitous of the welfare of employees, it
must also protect the rights of an employer to exercise what are clearly management prerogatives. As long as the companys
exercise of those rights and prerogative is in good faith to advance its interest and not for the purpose of defeating or
circumventing the rights of employees under the laws or valid agreements, such exercise will be upheld.

Procedural due process entails compliance with the two-notice rule in dismissing an employee, to wit: (1) the employer
must inform the employee of the specific acts or omissions for which his dismissal is sought; and (2) after the employee has
been given the opportunity to be heard, the employer must inform him of the decision to terminate his employment.

11. Ymbong vs ABS-CBN

G.R. No. 184885, March 7, 2012

Facts:
Petitioner Ernesto G. Ymbong started working for ABS-CBN Broadcasting Corporation (ABS-CBN) in 1993 at its
regional station in Cebu as a television talent, co-anchoring Hoy Gising and TV Patrol Cebu. His stint in ABS-CBN later
extended to radio when ABS-CBN Cebu launched its AM station DYAB in 1995 where he worked as drama and voice
talent, spinner, scriptwriter and public affairs program anchor.
Like Ymbong, Leandro Patalinghug also worked for ABS-CBN Cebu. Starting 1995, he worked as talent, director
and scriptwriter for various radio programs aired over DYAB.

On January 1, 1996, the ABS-CBN Head Office in Manila issued Policy No. HR-ER-016 or the Policy on Employees
Seeking Public Office. The pertinent portions read:

1. Any employee who intends to run for any public office position, must file his/her letter of resignation, at least
thirty (30) days prior to the official filing of the certificate of candidacy either for national or local election.

xxxx
3. Further, any employee who intends to join a political group/party or even with no political affiliation but who intends
to openly and aggressively campaign for a candidate or group of candidates (e.g. publicly speaking/endorsing candidate,
recruiting campaign workers, etc.) must file a request for leave of absence subject to managements approval. For this
particular reason, the employee should file the leave request at least thirty (30) days prior to the start of the planned leave
period.

x x x x [Emphasis and underscoring supplied.]

Because of the impending May 1998 elections and based on his immediate recollection of the policy at that time, Dante
Luzon, Assistant Station Manager of DYAB issued the following memorandum:

TO : ALL CONCERNED

FROM : DANTE LUZON

DATE : MARCH 25, 1998

SUBJECT : AS STATED

Please be informed that per company policy, any employee/talent who wants to run for any position in the coming election
will have to file a leave of absence the moment he/she files his/her certificate of candidacy.

The services rendered by the concerned employee/talent to this company will then be temporarily suspended for the entire
campaign/election period.

For strict compliance.

After the issuance of the March 25, 1998 Memorandum, Ymbong got in touch with Luzon. Luzon claims that Ymbong
approached him and told him that he would leave radio for a couple of months because he will campaign for the
administration ticket. It was only after the elections that they found out that Ymbong actually ran for public office himself
at the eleventh hour. Ymbong, on the other hand, claims that in accordance with the March 25, 1998 Memorandum, he
informed Luzon through a letter that he would take a few months leave of absence from March 8, 1998 to May 18, 1998
since he was running for councilor of Lapu-Lapu City.

As regards Patalinghug, Patalinghug approached Luzon and advised him that he will run as councilor for Naga, Cebu.
According to Luzon, he clarified to Patalinghug that he will be considered resigned and not just on leave once he files a
certificate of candidacy.

Later, Ymbong and Patalinghug both tried to come back to ABS-CBN Cebu. According to Luzon, he informed them that
they cannot work there anymore because of company policy. This was stressed even in subsequent meetings and they were
told that the company was not allowing any exceptions. ABS-CBN, however, agreed out of pure liberality to give them a
chance to wind up their participation in the radio drama, Nagbabagang Langit, since it was rating well and to avoid an abrupt
ending. The agreed winding-up, however, dragged on for so long prompting Luzon to issue to Ymbong the memorandum
dated September 14, 1998 automatically terminating them.

Issue:

1. Whether Policy No. HR-ER-016 is valid?

Held:

1. ABS-CBN had a valid justification for Policy No. HR-ER-016. Its rationale is embodied in the policy itself, to
wit:
Rationale:

ABS-CBN BROADCASTING CORPORATION strongly believes that it is to the best interest of the company to
continuously remain apolitical. While it encourages and supports its employees to have greater political awareness and for
them to exercise their right to suffrage, the company, however, prefers to remain politically independent and unattached to
any political individual or entity.

Therefore, employees who [intend] to run for public office or accept political appointment should resign from their positions,
in order to protect the company from any public misconceptions. To preserve its objectivity, neutrality and credibility, the
company reiterates the following policy guidelines for strict implementation.

We have consistently held that so long as a companys management prerogatives are exercised in good faith for the
advancement of the employers interest and not for the purpose of defeating or circumventing the rights of the employees
under special laws or under valid agreements, this Court will uphold them. In the instant case, ABS-CBN validly justified
the implementation of Policy No. HR-ER-016. It is well within its rights to ensure that it maintains its objectivity and
credibility and freeing itself from any appearance of impartiality so that the confidence of the viewing and listening public
in it will not be in any way eroded. Even as the law is solicitous of the welfare of the employees, it must also protect the
right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its
own business affairs to achieve its purpose cannot be denied.

It is worth noting that such exercise of management prerogative has earned a stamp of approval from no less than our
Congress itself when on February 12, 2001, it enacted Republic Act No. 9006, otherwise known as the Fair Election Act.
Section 6.6 thereof reads:

6.6. Any mass media columnist, commentator, announcer, reporter, on-air correspondent or personality who is a candidate
for any elective public office or is a campaign volunteer for or employed or retained in any capacity by any candidate or
political party shall be deemed resigned, if so required by their employer, or shall take a leave of absence from his/her work
as such during the campaign period: Provided, That any media practitioner who is an official of a political party or a member
of the campaign staff of a candidate or political party shall not use his/her time or space to favor any candidate or political
party. [Emphasis and underscoring supplied.]

12. Pollo vs. David, et.al.,

G.R. No. 181881, October 18, 2011

Facts:

An unsigned letter-complaint was filed before the Civil Service Commission (CSC) accusing the petitioner of acting
as counsel of another person in the latter's case before the same agency. Upon the instructions of the respondent CSC
Chairperson, the computers within the division where the petitioner was assigned were searched; the files therein were
copied, and later on sealed and secured to preserve the files therein. Based on the evidence obtained from such search, a
formal charge was filed against him for dishonesty, grave misconduct, and conduct prejudicial to the best interest of the
service, and violation of R.A. 6713. He was found guilty by the CSC, and meted out with the penalty of dismissal from
service. Petitioner thereafter questioned the legality of the search conducted by the CSC on his computer before the Supreme
Court.

Issue:
Whether or not the petitioners constitutional right to privacy and warrantless search and seizure were violated?

Held:
No.
The constitutional guarantee is not a prohibition of all searches and seizures but only of 'unreasonable' searches and
seizures. The search of petitioner's computer was justified there being reasonable ground for suspecting that the files stored
therein would yield incriminating evidence relevant to the investigation being conducted by CSC as government employer
of such misconduct subject of the anonymous complaint.
There are "special needs" which authorize warrantless searches involving public employees for work-related
reasons. The Court thus laid down a balancing test under which government interests are weighed against the employee's
reasonable expectation of privacy. This reasonableness test implicates neither probable cause nor the warrant requirement,
which are related to law enforcement.
To determine whether an employee has a reasonable expectation of privacy, the relevant surrounding circumstances
to consider include (1) the employee's relationship to the item seized; (2) whether the item was in the immediate control of
the employee when it was seized; and (3) whether the employee took actions to maintain his privacy in the item. These
factors are relevant to both the subjective and objective prongs of the reasonableness inquiry, and we consider the two
questions together.

13. DUNCAN VS GLAXO

Facts:

Petitioner Tecson was hired by respondent Glaxo Wellcome Phils. as medical representative. Tecson signed a contract of
employment, which stipulates among others, that he agrees to disclose existing or future relationship with co-employees
and employees of competing companies that should such relationship poses a conflict of interest, to resign from the
company. Despite repeated warnings, Tecson and Bettsy, an employee of a competing company, got married. Glaxo
transferred Tecson to Butuan, but he defied such orders and continued acting as medical representative in Camarines area.
The National Conciliation and Mediation board rendered as valid the policy and the right to transfer.

Issue:

Whether or not the policy constitutes a prohibition against marriage.

Ruling:

No. Glaxos policy prohibiting an employee from having a relationship is a valid exercise of management prerogatives as
relationships of that nature might compromise the interests of the company. Glaxo has a right to guard its trade secrets,
manufacturing formulas, marketing strategies and other confidential programs and information for competitors. The right
to protect its economic interests is recognized by the constitution which recognizes the right of enterprises to adopt and
enforce such a policy to protect its right to reasonable returns on investments and for expansion and growth. Indeed, while
our laws endeavor to give life to the constitutional policy on social justice and the protection of labor, it does not mean that
every labor dispute will be decided in favor of the workers. The law also recognized that management has rights which are
also entitled to respect and enforcement in the interest of fair play. The challenged company policy does not violate the
equal protection clause of the constitution as such clause is addressed only to the state or those acting under color of its
authority. The policy being questioned is not a policy against marriage. An employee of the company remains free to marry
anyone of his or her choosing. The policy is aimed at restricting a personal prerogative that belongs only to the individual.
However, an employees personal decision does not detract the employer from exercising management prerogatives to
ensure maximum profit and business success.

14. STAR paper vs symbol

Facts:
According to the respondents, Simbol and Comia allege that they did not resign voluntarily; they were compelled to resign
in view of an illegal company policy. As to respondent Estrella, she alleges that she had a relationship with co-worker Zuiga
who misrepresented himself as a married but separated man. After he got her pregnant, she discovered that he was not
separated. Thus, she severed her relationship with him to avoid dismissal due to the company policy. On November 30,
1999, she met an accident and was advised by the doctor at the Orthopedic Hospital to recuperate for twenty-one (21) days.
She returned to work on December 21, 1999 but she found out that her name was on-hold at the gate. She was denied entry.
She was directed to proceed to the personnel office where one of the staff handed her a memorandum. The memorandum
stated that she was being dismissed for immoral conduct. She refused to sign the memorandum because she was on leave
for twenty-one (21) days and has not been given a chance to explain. The management asked her to write an explanation.
However, after submission of the explanation, she was nonetheless dismissed by the company. Due to her urgent need for
money, she later submitted a letter of resignation in exchange for her thirteenth month pay.

Respondents later filed a complaint for unfair labor practice, constructive dismissal, separation pay and attorneys fees.
They averred that the aforementioned company policy is illegal and contravenes Article 136 of the Labor Code.

Issue:

Whether or not the 1995 Policy/Regulation of the company is violative of the Constitutional rights towards marriage and
the family of employees and of article 136 of the Labor Code.

Ruling:

The Supreme Court held that The 1987 Constitution under Article II, Section 18; Article XIII, Section 3 state our policy
towards the protection of labor under the following provisions. The Civil Code likewise protects labor with the following
provisions such as articles 1700 and 1702.

The Labor Code is the most comprehensive piece of legislation protecting labor. The case at bar involves Article 136 of the
Labor Code which provides:

Art. 136. It shall be unlawful for an employer to require as a condition of employment or continuation of employment that
a woman employee shall not get married, or to stipulate expressly or tacitly that upon getting married a woman employee
shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman
employee merely by reason of her marriage.

In denying the contention of the petitioner company, the SC applied the two factors to justify a bona fide occupational
qualification:

Since the finding of a bona fide occupational qualification justifies an employers no-spouse rule, the exception is interpreted
strictly and narrowly. There must be a compelling business necessity for which no alternative exists other than the
discriminatory practice. To justify a bona fide occupational qualification, the employer must prove two factors: (1) that the
employment qualification is reasonably related to the essential operation of the job involved; and, (2) that there is a factual
basis for believing that all or substantially all persons meeting the qualification would be unable to properly perform the
duties of the job.

The requirement that a company policy must be reasonable under the circumstances to qualify as a valid exercise of
management prerogative was also at issue in the 1997 case of Philippine Telegraph and Telephone Company v. NLRC. In
said case, the employee was dismissed in violation of petitioners policy of disqualifying from work any woman worker
who contracts marriage. We held that the company policy violates the right against discrimination afforded all women
workers under Article 136 of the Labor Code, but established a permissible exception, viz.:

A requirement that a woman employee must remain unmarried could be justified as a bona fide occupational qualification,
or BFOQ, where the particular requirements of the job would justify the same, but not on the ground of a general principle,
such as the desirability of spreading work in the workplace. A requirement of that nature would be valid provided it reflects
an inherent quality reasonably necessary for satisfactory job performance.
The cases of Duncan and PT&T instruct us that the requirement of reasonableness must be clearly established to uphold the
questioned employment policy. The employer has the burden to prove the existence of a reasonable business necessity. The
burden was successfully discharged in Duncan but not in PT&T.

The SC does not find a reasonable business necessity in the case at bar.

Petitioners sole contention that the company did not just want to have two (2) or more of its employees related between
the third degree by affinity and/or consanguinity is lame. That the second paragraph was meant to give teeth to the first
paragraph of the questioned rule is evidently not the valid reasonable business necessity required by the law.

It is significant to note that in the case at bar, respondents were hired after they were found fit for the job, but were asked to
resign when they married a co-employee. Petitioners failed to show how the marriage of Simbol, then a Sheeting Machine
Operator, to Alma Dayrit, then an employee of the Repacking Section, could be detrimental to its business operations.
Neither did petitioners explain how this detriment will happen in the case of Wilfreda Comia, then a Production Helper in
the Selecting Department, who married Howard Comia, then a helper in the cutter-machine. The policy is premised on the
mere fear that employees married to each other will be less efficient. If we uphold the questioned rule without valid
justification, the employer can create policies based on an unproven presumption of a perceived danger at the expense of an
employees right to security of tenure.

Petitioners contend that their policy will apply only when one employee marries a co-employee, but they are free to marry
persons other than co-employees. The questioned policy may not facially violate Article 136 of the Labor Code but it creates
a disproportionate effect and under the disparate impact theory, the only way it could pass judicial scrutiny is a showing that
it is reasonable despite the discriminatory, albeit disproportionate, effect. The failure of petitioners to prove a legitimate
business concern in imposing the questioned policy cannot prejudice the employees right to be free from arbitrary
discrimination based upon stereotypes of married persons working together in one company. Decision of the CA affirmed.

15.) AVON COSMETICS INC. vs. LETICIA LUNA- G.R. 153674-Dec. 20, 2006
FACTS:

The present petition stemmed from a complaint filed by respondent Luna alleging that she began working for Beautifont,
Inc. in 1972, first as a franchise dealer and then a year later, as a Supervisor. In 1978, Petitioner Avon acquired and took
over the management and operations of Beautifont, Inc., Respondent Luna continued working for said successor company.
On 5 November 1985, petitioner Avon and respondent Luna entered into a Supervisor's Agreement, whereby said parties
contracted in the manner quoted below:

The Company and the Supervisor mutually agree:

5) That the Supervisor shall sell or offer to sell, display or promote only and exclusively products sold by the
Company.

6) Either party may terminate this agreement at will, with or without cause, at any time upon notice to the other.

Respondent Luna was invited by a former Avon employee who was then currently a Sales Manager of Sandr Philippines,
Inc., a domestic corporation engaged in direct selling of vitamins and other food supplements, to sell said products.
Respondent Luna accepted the invitation as she then became a Group Franchise Director of Sandr Philippines, Inc.
concurrently with being a Group Supervisor of petitioner Avon. As Group Franchise Director, respondent Luna began
selling and/or promoting Sandr products to other Avon employees and friends. Then, she requested a law firm to render a
legal opinion as to the legal consequence of the Supervisor's Agreement she executed with petitioner Avon. In response to
her query, a lawyer of the firm opined that the Supervisor's Agreement was "contrary to law and public policy."
Respondent Luna wrote a letter to her colleagues and attached mimeographed copies of the opinion and then circulated
them.

I have asked their advice on three specific things:

On the first issue, my lawyers said that the company cannot change the existing "Agreement" without my consent,
and that it would be illegal if the company will compel me to sign the new agreement. x x x

My lawyers said that Section 5 of the Supervisors Agreement is NOT valid because it is contrary to public policy,
being an unreasonable restraint of trade.x x x

My lawyer said Section 6 is NOT valid because it is contrary to law and public policy. The company cannot terminate
the "Supervisor's Agreement" without a valid cause.

Petitioner Avon, in a letter by its President and General Manager, Jose Mari Franco, notified respondent Luna of the
termination or cancellation of her Supervisor's Agreement pursuant to section 6, with petitioner Avon due to her violation
of Section 5 of said agreement.

Aggrieved, respondent Luna filed a complaint for damages before the RTC of Makati City.

RTC rendered judgment in favor of respondent Luna. Petitioner Avon appealed. Court of Appeals promulgated the assailed
Decision which affirmed the decision of the RTC in toto.

ISSUE: WON the Supervisors agreement entered into by the parties is null and void for being against public policy. (NO)
WON Avon had right to terminate/cancel the Supervisors agreement. (YES)

HELD:

In business parlance, what was written in Sec. 5 is commonly termed as the "exclusivity clause." This is defined as
agreements which prohibit the obligor from engaging in "business" in competition with the obligee.

This exclusivity clause is more often the subject of critical scrutiny when it is perceived to collide with the Constitutional
proscription against "reasonable restraint of trade or occupation." The pertinent provision of the Constitution is quoted
hereunder. Section 19 of Article XII of the 1987 Constitution on the National Economy and Patrimony states that:

SEC. 19. The State shall regulate or prohibit monopolies when the public interest so requires. No combinations in
restraint of trade or unfair competition shall be allowed.

From the wordings of the Constitution, truly then, what is brought about to lay the test on whether a given agreement
constitutes an unlawful machination or combination in restraint of trade is whether under the particular circumstances of
the case and the nature of the particular contract involved, such contract is, or is not, against public interest.

Plainly put, public policy is that principle of the law which holds that no subject or citizen can lawfully do that which has a
tendency to be injurious to the public or against the public good. As applied to contracts, in the absence of express legislation
or constitutional prohibition, a court, in order to declare a contract void as against public policy, must find that the contract
as to the consideration or thing to be done, has a tendency to injure the public, is against the public good, or contravenes
some established interests of society, or is inconsistent with sound policy and good morals, or tends clearly to undermine
the security of individual rights, whether of personal liability or of private property.

From another perspective, the main objection to exclusive dealing is its tendency to foreclose existing competitors or new
entrants from competition in the covered portion of the relevant market during the term of the agreement. Only those
arrangements whose probable effect is to foreclose competition in a substantial share of the line of commerce affected can
be considered as void for being against public policy.
Applying the preceding principles to the case at bar, there is nothing invalid or contrary to public policy either in the
objectives sought to be attained by paragraph 5, i.e., the exclusivity clause, in prohibiting respondent Luna, and all
other Avon supervisors, from selling products other than those manufactured by petitioner Avon.

It was not by chance that Sandr Philippines, Inc. made respondent Luna one of its Group Franchise Directors. It doesn't
take a genius to realize that by making her an important part of its distribution arm, Sandr Philippines, Inc., a newly formed
direct-selling business, would be saving time, effort and money as it will no longer have to recruit, train and motivate
supervisors and dealers. Respondent Luna, who learned the tricks of the trade from petitioner Avon, will do it for them.
This is tantamount to unjust enrichment.

On the other hand, the termination clause of the Supervisor's Agreement clearly provides for two ways of terminating and/or
canceling the contract. The contract provided that it can be terminated or cancelled for cause, it also stated that it can be
terminated without cause, both at any time and after written notice. Thus, whether or not the termination or cancellation of
the Supervisor's Agreement was "for cause," is immaterial. The only requirement is that of notice to the other party. When
petitioner Avon chose to terminate the contract, for cause, respondent Luna was duly notified thereof. Thus, Avon had the
right to terminate such.

16.) ARMANDO YRASUEGUI vs. PHILIPPINE AIRLINES- GR no. 168081- October 17, 2008

FACTS:

Petitioner Armando G. Yrasuegui was a former international flight steward of (PAL). He stands five feet and eight inches
(58") with a large body frame. The proper weight for a man of his height and body structure is from 147 to 166 pounds, the
ideal weight being 166 pounds, as mandated by the Cabin and Crew Administration Manual of PAL. Petitioner failed to
meet the companys weight standards, prompting a leave without pay from March 5 to November 1985. After meeting the
required weight, petitioner was allowed to return to work. But petitioners weight problem recurred. He again went on leave
without pay from October 17 to February 1989.

On April 26, 1989, petitioner weighed 209 pounds, 43 pounds over his ideal weight. In line with company policy, he was
removed from flight duty effective May 6 to July 3, 1989. He was formally requested to trim down to his ideal weight and
report for weight checks on several dates. Petitioner underwent weight check. It was discovered that he was overweight
at 215 pounds, which is 49 pounds beyond the limit. Consequently, his off-duty status was retained.

PAL Line Administrator Gloria Dizon personally visited petitioner at his residence to check on the progress of his effort to
lose weight. Petitioner weighed 217 pounds, gaining 2 pounds from his previous weight. After the visit, petitioner made a
commitment to reduce weight in a letter addressed to Cabin Crew Group Manager Augusto Barrios. Despite the lapse of a
ninety-day period given him, petitioner remained overweight. He was informed of the PAL decision for him to remain
grounded until such time that he satisfactorily complies with the weight standards. However, petitioner failed to report for
weight checks.

When petitioner tipped the scale on July 30, 1990, he weighed at 212 pounds. Clearly, he was still way over his ideal weight
of 166 pounds. From then on, nothing was heard from petitioner until he followed up his case requesting for leniency on
the latter part of 1992. He weighed at 219 pounds on August 20, 1992 and 205 pounds on November 5, 1992.

On November 13, 1992, PAL finally served petitioner a Notice of Administrative Charge for violation of company standards
on weight requirements. He was given ten (10) days to answer. On his answer, he did not deny being overweight. What he
claimed is that his violation had already been condoned by PAL since "no action has been taken by the company" regarding
his case "since 1988." He also claimed that PAL discriminated against him because "the company has not been fair in
treating the cabin crew members who are similarly situated."
On June 15, 1993, petitioner was formally informed by PAL that due to his inability to attain his ideal weight, "and
considering the utmost leniency" extended to him "which spanned a period covering a total of almost five (5) years," his
services were considered terminated "effective immediately. "His motion for reconsideration having been denied, petitioner
filed a complaint for illegal dismissal against PAL.

Labor Arbiter Valentin C. Reyes ruled that petitioner was illegally dismissed. The Labor Arbiter held that the weight
standards of PAL are reasonable in view of the nature of the job of petitioner. However, the weight standards need not be
complied with under pain of dismissal since his weight did not hamper the performance of his duties. Assuming that it did,
petitioner could be transferred to other positions where his weight would not be a negative factor.

On appeal, the NLRC affirmed LA. PAL appealed to CA. Court of Appeals reversed and set aside NLRC decision in favor
of PAL. Thus, this petition.

ISSUE: WON obesity of petitioner is a valid ground for dismissal. (YES)

HELD:

I. The obesity of petitioner is a ground for dismissal under Article 282(e) of the Labor Code.

A reading of the weight standards of PAL would lead to no other conclusion than that they constitute a continuing
qualification of an employee in order to keep the job. Tersely put, an employee may be dismissed the moment he is unable
to comply with his ideal weight as prescribed by the weight standards. The dismissal of the employee would thus fall under
Article 282(e) of the Labor Code. As explained by the CA:

x x x [T]he standards violated in this case were not mere "orders" of the employer; they were the "prescribed weights" that
a cabin crew must maintain in order to qualify for and keep his or her position in the company. In other words, they were
standards that establish continuing qualifications for an employees position. In this sense, the failure to maintain these
standards does not fall under Article 282(a) whose express terms require the element of willfulness in order to be a ground
for dismissal. The failure to meet the employers qualifying standards is in fact a ground that does not squarely fall under
grounds (a) to (d) and is therefore one that falls under Article 282(e) the "other causes analogous to the foregoing."

By its nature, these "qualifying standards" are norms that apply prior to and after an employee is hired. They apply prior
to employment because these are the standards a job applicant must initially meet in order to be hired. They apply after
hiring because an employee must continue to meet these standards while on the job in order to keep his job. Under this
perspective, a violation is not one of the faults for which an employee can be dismissed pursuant to pars. (a) to (d) of Article
282; the employee can be dismissed simply because he no longer "qualifies" for his job irrespective of whether or not the
failure to qualify was willful or intentional. x x x

SC held that the obesity of petitioner, when placed in the context of his work as flight attendant, becomes an analogous
cause under Article 282(e) of the Labor Code that justifies his dismissal from the service. His obesity may not be unintended,
but is nonetheless voluntary. As the CA correctly puts it, "[v]oluntariness basically means that the just cause is solely
attributable to the employee without any external force influencing or controlling his actions. This element runs through all
just causes under Article 282, whether they be in the nature of a wrongful action or omission. Gross and habitual neglect, a
recognized just cause, is considered voluntary although it lacks the element of intent found in Article 282(a), (c), and (d)."

II. The dismissal of petitioner can be predicated on the bona fide occupational qualification defense.

Employment in particular jobs may not be limited to persons of a particular sex, religion, or national origin unless the
employer can show that sex, religion, or national origin is an actual qualification for performing the job. The qualification
is called a bona fide occupational qualification (BFOQ).

There is no merit to the argument that BFOQ cannot be applied if it has no supporting statute. Too, the Labor Arbiter,
NLRC, and CA are one in holding that the weight standards of PAL are reasonable. A common carrier, from the nature of
its business and for reasons of public policy, is bound to observe extraordinary diligence for the safety of the passengers it
transports. It is bound to carry its passengers safely as far as human care and foresight can provide, using the utmost
diligence of very cautious persons, with due regard for all the circumstances.

The law leaves no room for mistake or oversight on the part of a common carrier. Thus, it is only logical to hold that the
weight standards of PAL show its effort to comply with the exacting obligations imposed upon it by law by virtue of being
a common carrier. The business of PAL is air transportation. As such, it has committed itself to safely transport its
passengers. In other words, the primary objective of PAL in the imposition of the weight standards for cabin crew is flight
safety. The task of a cabin crew or flight attendant is not limited to serving meals or attending to the whims and caprices of
the passengers. The most important activity of the cabin crew is to care for the safety of passengers and the evacuation of
the aircraft when an emergency occurs. Passenger safety goes to the core of the job of a cabin attendant. On board an aircraft,
the body weight and size of a cabin attendant are important factors to consider in case of emergency. Aircrafts have
constricted cabin space, and narrow aisles and exit doors. Thus, the arguments of respondent that "[w]hether the airlines
flight attendants are overweight or not has no direct relation to its mission of transporting passengers to their destination";
and that the weight standards "has nothing to do with airworthiness of respondents airlines," must fail.

17.) LINTON COMMERCIAL CO. INC. vs. ALEX HELLERA et.al- G.R. No. 163147 October 10, 2007

FACTS:

Linton is a domestic corporation engaged in the business of importation, wholesale, retail and fabrication of steel and its
by-products. Petitioner Desiree Ong is Lintons vice president. Linton issued a memorandum addressed to its employees
informing them of the companys decision to suspend its operations from 18 December 1997 to 5 January 1998 due to the
currency crisis that affected its business operations. Linton submitted an establishment termination report to the DOLE
regarding the temporary closure of the establishment. The companys operation was to resume on 6 January 1998.

Linton issued another memorandum informing them that effective 12 January 1998, it would implement a new compressed
workweek of three (3) days on a rotation basis. In other words, each worker would be working on a rotation basis for three
working days only instead for six days a week. On the same day, Linton submitted an establishment termination report
concerning the rotation of its workers. Linton proceeded with the implementation of the new policy without waiting for its
approval by DOLE. Aggrieved, sixty-eight (68) workers (workers) filed a Complaint for illegal reduction of workdays with
the Arbitration Branch of the NLRC on 17 July 1998. The workers pointed out that Linton implemented the reduction of
work hours without observing Article 283 of the Labor Code, which required submission of notice thereof to DOLE one
month prior to the implementation of reduction of personnel.

Petitioners, on the other hand, contended that the devaluation of the peso created a negative impact in international trade
and affected their business because a majority of their raw materials were imported. They claimed that their business
suffered a net loss of 3,569,706.57 and they decided to reduce the working days of its employees to three (3) days on a
rotation basis as a cost-cutting measure.

Labor Arbiter rendered a Decision finding petitioners guilty of illegal reduction of work hours and directing them to pay
each of the workers their three (3) days/weeks worth of work compensation from 12 January 1998 to 13 July 1998.

Petitioners appealed to the National Labor Relations Commission (NLRC). NLRC reversed the decision of the Labor
Arbiter. The NLRC held that an employer has the prerogative to control all aspects of employment in its business
organization, including the supervision of workers, work regulation, lay-off of workers, dismissal and recall of workers.
The NLRC took judicial notice of the Asian currency crisis in 1997 and 1998 thus finding Lintons decision to implement
a compressed workweek as a valid exercise of management prerogative. Moreover, the NLRC ruled that Article 283 of the
Labor Code, which requires an employer to submit a written notice to DOLE one (1) month prior to the closure or reduction
of personnel, is not applicable to the instant case because no closure was undertaken and no reduction of employees was
implemented by Linton.

The workers then filed before the Court of Appeals a petition for certiorari.

In reversing the NLRC, the Court of Appeals ruled that the employees were constructively dismissed because the short
period of time between the submission of the establishment termination report informing DOLE of its intention to observe
a compressed workweek and the actual implementation thereat was a manifestation of Lintons intention to eventually
retrench the employees. Linton failed to establish enough factual basis to justify the necessity of a reduced workweek.

ISSUE: whether or not there was an illegal reduction of work when Linton implemented a compressed workweek by
reducing from six to three the number of working days with the employees working on a rotation basis. (YES)

HELD:

The Bureau of Working Conditions of the DOLE released a bulletin providing for in determining when an employer can
validly reduce the regular number of working days. The said bulletin states that a reduction of the number of regular working
days is valid where the arrangement is resorted to by the employer to prevent serious losses due to causes beyond his control,
such as when there is a substantial slump in the demand for his goods or services or when there is lack of raw materials.

A close examination of petitioners financial reports for 1997-1998 shows that, while the company suffered a loss of
3,645,422.00 in 1997, it retained a considerable amount of earnings and operating income. Clearly then, while Linton
suffered from losses for that year, there remained enough earnings to sufficiently sustain its operations. In business,
sustained operations in the black is the ideal but being in the red is a cruel reality. However, a year of financial losses would
not warrant the immolation of the welfare of the employees, which in this case was done through a reduced workweek that
resulted in an unsettling diminution of the periodic pay for a protracted period. Permitting reduction of work and pay at the
slightest indication of losses would be contrary to the States policy to afford protection to labor and provide full
employment.

Certainly, management has the prerogative to come up with measures to ensure profitability or loss minimization.
However, such privilege is not absolute. Management prerogative must be exercised in good faith and with due regard
to the rights of labor.

As previously stated, financial losses must be shown before a company can validly opt to reduce the work hours of its
employees. However, to date, no definite guidelines have yet been set to determine whether the alleged losses are sufficient
to justify the reduction of work hours. If the standards set in determining the justifiability of financial losses under Article
283 (i.e., retrenchment) or Article 286 (i.e., suspension of work) of the Labor Code were to be considered, petitioners would
end up failing to meet the standards. On the one hand, Article 286 applies only when there is a bona fide suspension of the
employers operation of a business or undertaking for a period not exceeding six (6) months. Records show that Linton
continued its business operations during the effectivity of the compressed workweek, which spanned more than the
maximum period. On the other hand, for retrenchment to be justified, any claim of actual or potential business losses must
satisfy the following standards: (1) the losses incurred are substantial and not de minimis; (2) the losses are actual or
reasonably imminent; (3) the retrenchment is reasonably necessary and is likely to be effective in preventing the expected
losses; and (4) the alleged losses, if already incurred, or the expected imminent losses sought to be forestalled, are proven
by sufficient and convincing evidence. Linton failed to comply with these standards.

All taken into account, the compressed workweek arrangement was unjustified and illegal. Thus, petitioners committed
illegal reduction of work hours.

18.) MANILA PAVILION HOTEL, OWNED AND OPERATED BY ACESITE (PHILS.) HOTEL
CORPORATION VS. HENRY DELADA- G.R. no. 189947- January 25, 2012
FACTS:

Petitioner Henry Delada was the Union President of the Manila Pavilion Supervisors Association at MPH. He was originally
assigned as Head Waiter of Rotisserie, a fine-dining restaurant operated by petitioner. Pursuant to a supervisory personnel
reorganization program, MPH reassigned him as Head Waiter of Seasons Coffee Shop, another restaurant operated by
petitioner at the same hotel. Respondent declined the inter-outlet transfer and instead asked for a grievance meeting on the
matter, pursuant to their Collective Bargaining Agreement (CBA).

MPH replied and told respondent to report to his new assignment but he adamantly refused to assume his new post at
the Seasons Coffee Shop and instead continued to report to his previous assignment at Rotisserie. Thus, MPH sent him
several memoranda, requiring him to explain in writing why he should not be penalized for: serious misconduct; willful
disobedience of the lawful orders of the employer; gross insubordination; gross and habitual neglect of duties; and willful
breach of trust. According to him, since the grievance machinery under their CBA had already been initiated, his transfer
must be held in abeyance. Thus, MPH initiated administrative proceedings against him.

The parties failed to reach a settlement during the grievance meeting. Respondent then elevated his grievance to the Peers
Resources Development Director-no settlement. Then, respondent appealed the matter to the Grievance Committee level-
no settlement. The committee recommended that he proceed to the next level of the grievance procedure. Consequently,
Delada lodged a Complaint before the National Conciliation and Mediation Board.

MPH issued a Decision, which found him guilty of insubordination. The Decision imposed on Delada the penalty of 90-
day suspension. He opposed the Decision, arguing that MPH had lost its authority to proceed with the disciplinary action
against him, since the matter had already been included in the voluntary arbitration.

PVA issued a Decision and ruled that the transfer of Delada was a valid exercise of management prerogative. According
to the panel, the transfer order was done in the interest of the efficient and economic operations of MPH, and that
there was no malice, bad faith, or improper motive attendant upon the transfer of Delada to Seasons Coffee Shop.
PVA found that the real reason why he refused to obey the transfer order was that he asked for additional monetary benefits
as a condition for his transfer. The PVA thus pronounced that Delada had no valid and justifiable reason to refuse or even
to delay compliance with the management's directive. However, PVA ruled that there was no legal and factual basis to
support petitioner's imposition of preventive suspension on Delada. It also found that MPH went beyond the 30-day period
of preventive suspension prescribed by the Implementing Rules of the Labor Code when petitioner proceeded to impose a
separate penalty of 90-day suspension on him. Furthermore, the PVA ruled that MPH lost its authority to continue with the
administrative proceedings for insubordination and willful disobedience of the transfer order and to impose the penalty of
90-day suspension on respondent. Then, MPH was liable to pay back wages and other benefits.

The CA affirmed the Decision of the PVA and denied petitioner's Motion for Reconsideration. MPH filed the instant
Petition.

ISSUE: WON petitioner Manila Pavilion Hotel had the authority to continue with the administrative proceedings for
insubordination and willful disobedience against Delada (YES)

HELD:

First, it must be pointed out that the basis of the 30-day preventive suspension imposed on Delada was different from that
of the 90-day penalty of suspension. The 30-day preventive suspension was imposed by MPH on the assertion that Delada
might sabotage hotel operations if preventive suspension would not be imposed on him. On the other hand, the penalty of
90-day suspension was imposed on respondent as a form of disciplinary action. It was the outcome of the administrative
proceedings conducted against him. Preventive suspension is a disciplinary measure resorted to by the employer pending
investigation of an alleged malfeasance or misfeasance committed by an employee. The employer temporarily bars the
employee from working if his continued employment poses a serious and imminent threat to the life or property of the
employer or of his co-workers. On the other hand, the penalty of suspension refers to the disciplinary action imposed on the
employee after an official investigation or administrative hearing is conducted. The employer exercises its right to
discipline erring employees pursuant to company rules and regulations. Thus, a finding of validity of the penalty of 90-
day suspension will not embrace the issue of the validity of the 30-day preventive suspension. In any event, petitioner no
longer assails the ruling of the CA on the illegality of the 30- day preventive suspension.
The PVA herein did not make a definitive ruling on the merits of the validity of the 90-day suspension. The panel only held
that MPH lost its jurisdiction to impose disciplinary action on respondent. Accordingly, SC ruled in this case that MPH did
not lose its authority to discipline respondent for his continued refusal to report to his new assignment.

The refusal to obey a valid transfer order constitutes willful disobedience of a lawful order of an employer. Employees may
object to, negotiate and seek redress against employers for rules or orders that they regard as unjust or illegal. However,
until and unless these rules or orders are declared illegal or improper by competent authority, the employees ignore or
disobey them at their peril.

19.) PHARMACIA AND UPJOHN, INC. (NOW PFIZER PHILIPPINES, INC.), ASHLEY MORRIS, ALEDA CHU,
JANE MONTILLA & FELICITO GARCIA VS. RICARDO P. ALBAYDA, JR.- G.R. no. 172724- August 23, 2010

FACTS:

Respondent Ricardo P. Albayda, Jr. (respondent) was an employee of Upjohn, Inc. (Upjohn) in 1978 and continued working
there until 1996 when a merger between Pharmacia and Upjohn was created. After the merger, respondent was designated
by petitioner Pharmacia and Upjohn (Pharmacia) as District Sales Manager assigned to District XI in the Western Visayas
area. During the period of his assignment, respondent settled in Bacolod City. Respondent received a Memorandum which
reassigned him as District Sales Manager to District XII in the Northern Mindanao area. In response to the memorandum,
respondent wrote a letter to Felicito M. Garcia (Garcia), Pharmacia's Vice-President for Sales and Marketing, questioning
his transfer from District XI to District XII. Respondent concluded that his transfer might be a way for his managers to
dismiss him from employment. Respondent added that he could not possibly accept his new assignment in Cagayan de Oro
City because he will be dislocated from his family.

Garcia wrote a letter to respondent denying his request to be reassigned to the Western Visayas area. Garcia explained that
the factors used in determining assignments of managers are to maximize business opportunities and growth and
development of personnel. Respondent then wrote a letter to Aleda Chu (Chu), Pharmacia's National Sales and External
Business Manager, reiterating his request to be reassigned to the Western Visayas area. Chu explained to respondent that
they are moving him to Cagayan de Oro City, because of their need of respondent's expertise to build the business there. Chu
added that the district performed dismally in 1999 and, therefore, they were confident that under respondent's leadership,
he can implement new ways and develop the sales force to become better and more productive.

Respondent was also given an option to be assigned in Metro Manila as a position in the said territory had recently opened
when Joven Rodriguez was transferred as Government Accounts and Special Projects Manager. Montilla, the Human
Resource officer, gave respondent until June 2, 2000 to talk to his family and weigh the pros and cons of his decision on
whether to accept a post in Cagayan de Oro City or in Manila.

Respondent told Montilla that he will be airing his grievance before the National Labor Relations Commission (NLRC).
Montilla directed respondent to report for work in Manila within 5 working days from receipt of the memorandum. However,
Montilla stated that she had not heard from respondent and that he has not replied to their last memorandum. Respondent
was warned that the same would be a final notice for him to report for work in Manila within 5 working days from receipt
of the memo; otherwise, his services will be terminated on the basis of being absent without official leave (AWOL).

On July 13, 2000, Montilla sent respondent a memorandum notifying him of their decision to terminate his services after he
repeatedly refused to report for work despite due notice.
Respondent filed a Complaint with the NLRC, Bacolod City against Pharmacia, Chu, Montilla and Garcia for constructive
dismissal. Also included in the complaint was Ashley Morris, Pharmacia's President.

Labor Arbiter (LA) rendered a Decision dismissing the case. Respondent appealed to the NLRC which dismissed the
appeal. Aggrieved, respondent filed a Petition for Certiorari before the CA. CA rendered a Decision ruling in favor of
respondent, reversed and set aside the NLRC decision.

ISSUE: WON petitioner exercises its management prerogative in transferring respondent (YES)

HELD:

Jurisprudence recognizes the exercise of management prerogative to transfer or assign employees from one office or
area of operation to another, provided there is no demotion in rank or diminution of salary, benefits, and other privileges,
and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion
without sufficient cause.

To determine the validity of the transfer of employees, the employer must show that the transfer is not unreasonable,
inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries,
privileges and other benefits. Should the employer fail to overcome this burden of proof, the employee's transfer shall be
tantamount to constructive dismissal.

Both the LA and the NLRC ruled that the reassignment of respondent was a valid exercise of petitioners' management
prerogative. The LA shared petitioners' posture that the transfer of respondent was a valid exercise of a legitimate
management prerogative to maximize business opportunities, growth and development of personnel and that the expertise
of respondent was needed to build the company's business in Cagayan de Oro City which dismally performed in 1999. In
addition, the LA explained that the reassignment of respondent was not a demotion as he will also be assigned as a District
Sales Manager in Mindanao or in Metro Manila and that the notice of his transfer did not indicate that his emoluments will
be reduced. Moreover, the LA mentioned that respondent was entitled to Relocation Benefits and Allowance in accordance
with petitioners' Benefits Manual.

The NLRC affirmed in toto the findings of the LA. The NLRC ruled that petitioners' restructuring move was a valid exercise
of its management prerogative and authorized under the employment contract of respondent, to wit:

We do not see in the records any evidence to prove that the restructuring move of respondent company was done with ill
motives or with malice and bad faith purposely to constructively terminate complainant's employment. Such
misinterpretation or misguided supposition by complainant is belied by the fact that respondent's officers had in several
communications officially sent to complainant, expressly recognized complainant's expertise and capabilities as a top sales
man and manager for which reason the respondent company needs his services and skills to energize the low-performing
areas in order to maximize business opportunities and to afford complainant an opportunity for further growth and
development.

In conclusion, it bears to stress that the CA should not have disturbed the factual findings of the LA and the NLRC in the
absence of arbitrariness or palpable error. The reassignment of respondent to another territory was a valid exercise of
petitioners' management prerogative and, consequently, his dismissal was for cause and in accordance with the due process
requirement of law.

20.) PRINCE TRANSPORT INC. vs. GARCIA et. Al- GR no. 167291- January 12, 2011

FACTS:
Respondents alleged that they were employees of Prince Transport, Inc. (PTI), a company engaged in the business of
transporting passengers by land; respondents were hired either as drivers, conductors, mechanics or inspectors, except for
respondent Diosdado Garcia (Garcia), who was assigned as Operations Manager; in addition to their regular monthly
income, respondents also received commissions equivalent to 8 to 10% of their wages; sometime in October 1997, the said
commissions were reduced to 7 to 9%; this led respondents and other employees of PTI to hold a series of meetings to
discuss the protection of their interests as employees; these meetings led petitioner Renato Claros, who is the president of
PTI, to suspect that respondents are about to form a union; he made known to Garcia his objection to the formation of a
union; in December 1997, PTI employees requested for a cash advance, but the same was denied by management which
resulted in demoralization on the employees' ranks; later, PTI acceded to the request of some, but not all, of the employees;
the foregoing circumstances led respondents to form a union for their mutual aid and protection; in order to block the
continued formation of the union, PTI caused the transfer of all union members and sympathizers to one of its sub-
companies, Lubas Transport (Lubas); despite such transfer, the schedule of drivers and conductors, as well as their company
identification cards, were issued by PTI; the daily time records, tickets and reports of the respondents were also filed at the
PTI office; and, all claims for salaries were transacted at the same office; later, the business of Lubas deteriorated because
of the refusal of PTI to maintain and repair the units being used therein, which resulted in the virtual stoppage of its
operations and respondents' loss of employment.

Petitioners, on the other hand, denied the material allegations of the complaints contending that herein respondents were no
longer their employees, since they all transferred to Lubas at their own request; petitioners have nothing to do with the
management and operations of Lubas as well as the control and supervision of the latter's employees; petitioners were not
aware of the existence of any union in their company and came to know of the same only when they were served a copy of
the summons in the petition for certification election filed by the union; that before the union was registered on April 15,
1998, the complaint subject of the present petition was already filed; that the real motive in the filing of the complaints was
because PTI asked respondents to vacate the bunkhouse where they (respondents) and their respective families were staying
because PTI wanted to renovate the same.

Subsequently, the complaints filed by respondents were consolidated.

Labor Arbiter ruled that petitioners are not guilty of unfair labor practice in the absence of evidence to show that they
violated respondents' right to self-organization. The Labor Arbiter also held that Lubas is the respondents' employer and
that it (Lubas) is an entity which is separate, distinct and independent from PTI. Nonetheless, the Labor Arbiter found that
Lubas is guilty of illegally dismissing respondents from their employment.

Respondents filed a Partial Appeal with the NLRC praying, among others, that PTI should also be held equally liable as
Lubas. CA rendered the herein assailed Decision which granted respondents' petition. The CA ruled that petitioners are
guilty of unfair labor practice; that Lubas is a mere instrumentality, agent conduit or adjunct of PTI; and that petitioners' act
of transferring respondents' employment to Lubas is indicative of their intent to frustrate the efforts of respondents to
organize themselves into a union.

ISSUE: WON Petitioner is guilty of unfair labor practice (YES)

HELD:

As to whether petitioners are guilty of unfair labor practice, the Court finds no cogent reason to depart from the findings of
the CA that respondents' transfer of work assignments to Lubas was designed by petitioners as a subterfuge to foil the
former's right to organize themselves into a union. Under Article 248 (a) and (e) of the Labor Code, an employer is guilty
of unfair labor practice if it interferes with, restrains or coerces its employees in the exercise of their right to self-
organization or if it discriminates in regard to wages, hours of work and other terms and conditions of employment in
order to encourage or discourage membership in any labor organization.

Indeed, evidence of petitioners' unfair labor practice is shown by the established fact that, after respondents' transfer to
Lubas, petitioners left them high and dry insofar as the operations of Lubas was concerned. The Court finds no error in the
findings and conclusion of the CA that petitioners "withheld the necessary financial and logistic support such as spare parts,
and repair and maintenance of the transferred buses until only two units remained in running condition." This left
respondents virtually jobless.

WHEREFORE , the instant petition is denied

21.) NIPPON HOUSING PHIL. INC. et.al vs. LEYNES- GR no. 177816- August 3, 2011

FACTS:

From its original business of providing building maintenance, it appears that petitioner Nippon Housing Philippines, Inc.
(NHPI) ventured into building management, providing such services as handling of the lease of condominium units,
collection of dues and compliance with government regulatory requirements. Having gained the Bay Gardens
Condominium Project (the Project) of the Bay Gardens Condominium Corporation (BGCC) as its first and only building
maintenance client, NHPI hired respondent Maiah Angela Leynes (Leynes) for the position of Property Manager, with a
salary of P40,000.00 per month. Tasked with surveying the requirements of the government and the client for said project,
the formulation of house rules and regulations and the preparation of the annual operating and capital expenditure budget,
Leynes was also responsible for the hiring and deployment of manpower, salary and position determination as well as the
assignment of the schedules and responsibilities of employees.

Leynes had a misunderstanding with Engr. Honesto Cantuba (Cantuba), the Building Engineer assigned at the Project,
regarding the extension of the latter's working hours. Aside from instructing the security guards to bar Engr. Cantuba from
entry into the Project and to tell him to report to the NHPI's main office in Makati, Leynes also sent a letter by telefax to
Joel Reyes (Reyes), NHPI's Human Resources Department (HRD) Head, apprising the latter of said Building Engineer's
supposed insubordination and disrespectful conduct. With Engr. Cantuba's submission of a reply in turn accusing Leynes
of pride, conceit and poor managerial skills, Hiroshi Takada (Takada), NHPI's Vice President, went on to issue
memorandum, attributing the incident to "simple personal differences" and directing Leynes to allow Engr. Cantuba to
report back for work.

Disappointed with the foregoing management decision, Leynes submitted to Tadashi Ota, NHPI's President, a letter asking
for an emergency leave of absence for the supposed purpose of coordinating with her lawyer regarding her resignation letter.
NHPI offered the Property Manager position to Engr. Carlos Jose on as a consequence Leynes' signification of her intention
to resign, it also appears that Leynes sent another letter to Reyes by telefax on the same day, expressing her intention to
return to work on 15 February 2002 and to call off her planned resignation upon the advice of her lawyer. Having
subsequently reported back for work, Leynes send out a written protest regarding the verbal information she received from
Reyes that a substitute has already been hired for her position. Leynes was further served by petitioner Yasuhiro Kawata
and Noboyushi Hisada, NHPI's Senior Manager and Janitorial Manager, with a letter and memorandum from Reyes,
relieving her from her position and directing her to report to NHPI's main office while she was on floating status.

Aggrieved, Leynes filed against NHPI and its above-named officers the complaint for illegal dismissal, unpaid salaries,
benefits, damages and attorney's fees docketed before the arbitral level of the National Labor Relations Commission.

NHPI and its officers asserted that the management's exercise of the prerogative to put an employee on floating status for a
period not exceeding six months was justified in view of her threatened resignation from her position and BGCC's request
for her replacement.

Labor Arbiter Manuel Manansala rendered a decision, finding that NHPI's act of putting Leynes on floating status was
equivalent to termination from employment without just cause and compliance with the twin requirements of notice and
hearing. NLRC ruled that NHPI's placement of Leynes on floating status was necessitated by the client's contractually
guaranteed right to request for her relief.

CA reversed and set aside NLRC decision, upon the following findings and conclusions: (a) absent showing that there was
a bona fide suspension of NHPI's business operations, Leynes' relief from her position - even though requested by the client
- was tantamount to a constructive dismissal; (b) the bad faith of NHPI and its officers is evident from the hiring of Engr.
Jose as Leynes' replacement; and, (c) the failure of NHPI and its officers to prove a just cause for Leynes' termination, the
redundancy of her services and their compliance with the requirements of due process renders them liable for illegal
dismissal.

ISSUE: WON petitioners are guilty of constructively dismissing Leynes from employment (NO)

HELD:

Considering that even labor laws discourage intrusion in the employers' judgment concerning the conduct of their
business, courts often decline to interfere in their legitimate business decisions, absent showing of illegality, bad faith or
arbitrariness. Indeed, the right of employees to security of tenure does not give them vested rights to their positions to
the extent of depriving management of its prerogative to change their assignments or to transfer them. The record shows
that Leynes filed the complaint for actual illegal dismissal from which the case originated on 22 February 2002 or
immediately upon being placed on floating status as a consequence of NHPI's hiring of a new Property Manager for the
Project. The rule is settled, however, that "off-detailing" is not equivalent to dismissal, so long as such status does not
continue beyond a reasonable time and that it is only when such a "floating status" lasts for more than six months that the
employee may be considered to have been constructively dismissed. A complaint for illegal dismissal filed prior to the lapse
of said six-month and/or the actual dismissal of the employee is generally considered as prematurely filed.

Viewed in the light of the foregoing factual antecedents, we find that the CA reversibly erred in holding petitioners liable
for constructively dismissing Leynes from her employment. There is said to be constructive dismissal when an act of clear
discrimination, insensitivity or disdain on the part of the employer has become so unbearable as to leave an employee with
no choice but to forego continued employment. Constructive dismissal exists where there is cessation of work because
continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a
diminution in pay.

With no other client aside from BGCC for the building management side of its business, we find that NHPI was acting
well within its prerogatives when it eventually terminated Leynes' services on the ground of redundancy. One of the
recognized authorized causes for the termination of employment, redundancy exists when the service capability of the
workforce is in excess of what is reasonably needed to meet the demands of the business enterprise. A redundant position
is one rendered superfluous by any number of factors, such as overhiring of workers, decreased volume of business,
dropping of a particular product line previously manufactured by the company or phasing out of service activity priorly
undertaken by the business. It has been held that the exercise of business judgment to characterize an employee's service
as no longer necessary or sustainable is not subject to discretionary review where, as here, it is exercised there is no
showing of violation of the law or arbitrariness or malice on the part of the employer. An employer has no legal obligation
to keep more employees than are necessary for the operation of its business.

Having been validly terminated on the ground of redundancy, Leynes is entitled to separation pay equivalent to one month
salary for every year of service but not to the backwages adjudicated in her favor by the Labor Arbiter.

22. G.R. No. 106256 December 28, 1994

MAYA FARMS EMPLOYEES ORGANIZATION, MAYA REALTY AND LIVESTOCK SUPERVISORY
UNION, MAYA FARMS EMPLOYEES ASSOCIATION, and MAYA FARMS, INC. SUPERVISORY UNION,
petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, MAYA REALTY & LIVESTOCK, INC., MAYA FARMS,
INC., and LIBERTY FLOUR MILLS, INC., respondents.

KAPUNAN, J.:

FACTS:

Private respondents Maya Farms, Inc. and Maya Realty and Livestock Corporation belong to the Liberty Mills group of
companies whose undertakings include the operation of a meat processing plant which produces ham, bacon, cold cuts,
sausages and other meat and poultry products. Petitioners, on the other hand, are the exclusive bargaining agents of the
employees of Maya Farms, Inc. and the Maya Realty and Livestock Corporation.
April 12, 1991 - private respondents announced the adoption of an early retirement program as a cost-cutting measure
considering that their business operations suffered major setbacks over the years. The program was voluntary and could
be availed of only by employees with at least eight (8) years of service.

Dialogues were thereafter conducted to give the parties an opportunity to discuss the details of the program. Accordingly,
the program was amended to reduce the minimum requirement of eight (8) years of service to only five (5) years.

However, the response to the program was nil. There were only a few takers. To avert further losses, private respondents
were constrained to look into the companies' organizational set-up in order to streamline operations. Consequently, the
early retirement program was converted into a special redundancy program intended to reduce the work force to an
optimum number so as to make operations more viable.

In December 1991 - a total of sixty-nine (69) employees from the two companies availed of the special redundancy
program.

January 17, 1992 - the two companies sent letters to sixty-six (66) employees informing them that the irrespective
positions had been declared redundant. The notices likewise stated that their services would be terminated effective thirty
(30) days from receipt thereof. Separation benefits, including the conversion of all earned leave credits and other benefits
due under existing CBAs were thereafter paid to those affected.

January 24, 1992 - a notice of strike was filed by the petitioners which accused private respondents, among others, of
unfair labor practice, violation of CBA and discrimination.
Conciliation proceedings were held by the National Conciliation and Mediation Board (NCMB) but the parties failed to
arrive at a settlement.
In their position paper, petitioners averred that in the dismissal of sixty-six (66) union officers and members on the ground
of redundancy, private respondents circumvented the provisions in their CBA. Petitioners also alleged that the companies'
claim that they were in economic crisis was fabricated because in1990, a net income of over 83 million pesos was realized
by Liberty Flour Mills Group of Companies.

Invoking the workers' constitutional right to security of tenure, petitioners prayed for the reinstatement of the sixty-six
(66) employees and the payment of attorney's fees as they were constrained to hire the services of counsel in order to
protect the workers' rights.

On their part, private respondents contend that their decision to implement a special redundancy program was an exercise
of management prerogative which could not be interfered with unless it is shown to be tainted with bad faith and ill
motive. Private respondents explained that they had no choice but to reduce their work force, otherwise, they would suffer
more losses. Furthermore, they denied that the program violated CBA provisions. NLRC favored the company.

ISSUE/S:

WON there was grave abuse of discretion amounting to lack or in excess of jurisdiction with the factual findings of public
respondent

HELD:

The termination of the sixty-six employees was done in accordance with Article 283 of the Labor Code.

The court fully agree with the findings and conclusions of the public respondent on the issue of termination. A close
examination of the positions retained by management show that said positions such as egg sorter, debonner were but the
minimal positions required to sustain the limited functions/operations of the meat processing department.

In the absence of any evidence to prove bad faith on the part of management in arriving at such decision, which
records on hand failed to show in instant case, the rationality of the act of management in this regard must be
sustained.
The rule is well-settled that labor laws discourage interference with an employer's judgment in the conduct of his business.
Even as the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are
clearly management prerogatives. As long as the company's exercise of the same is in good faith to advance its interest
and not for the purpose of defeating or circumventing the rights of employees under the laws or valid agreements, such
exercise will be upheld. Finally, contrary to petitioners' contention, there is nothing on record to show that the 30-day
notice of termination to the workers was disregarded and that the same substituted with separation pay by private
respondents. As found by public respondent, written notices of separation were sent to the employees on January 17,
1992. The notices expressly stated that the termination of employment was to take effect one month from receipt thereof.
Therefore, the allegation that separation pay was given in lieu of the 30-day notice required by law is baseless.

23. G.R. No. 100701 March 28, 2001

PRODUCERS BANK OF THE PHILIPPINES, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and PRODUCERS BANK EMPLOYEES ASSOCIATION,1
respondents.

GONZAGA-REYES, J.:

FACTS:

The present petition originated from a complaint filed by private respondent on 11 February 1988 with the Arbitration
Branch, NLRC, charging petitioner with diminution of benefits, non-compliance with Wage Order No. 6 and non-
payment of holiday pay. In addition, private respondent prayed for damages.

Labor arbiter dismissed the complaint for lack of merit. NLRC, however, granted all of private respondents claims,
except for damages. Petition filed a Motion for Partial Reconsideration, which was denied by the NLRC. Hence, recourse
to this Court.

Petitioner contends: that the NLRC gravely abused its discretion in ruling as it did for the succeeding reasons stated: (1) it
contravened the Supreme Court decision in Traders Royal Bank v. NLRC, et al., G.R. No. 88168, promulgated on August
30, 1990, (2) its ruling is not justified by law and Art. 100 of the Labor Code, (3) its ruling is contrary to the CBA, and (4)
the so-called company practice invoked by it has no legal and moral bases (4) petitioner, under conservatorship and
distressed, is exempted under Wage Order No. 6.

ISSUE/S:

WON respondent is entitled for the payment of the above-mentioned monetary claims, particularly BONUS.

HELD:

As to the bonuses, private respondent declared in its position papers filed with the NLRC that

1. Producers Bank of the Philippines, a banking institution, has been providing several benefits to its employees
since 1971 when it started its operation. Among the benefits it had been regularly giving is a mid-year bonus
equivalent to an employees one-month basic pay and a Christmas bonus equivalent to an employees one whole
month salary (basic pay plus allowance);
2. When P.D. 851, the law granting a 13thmonth pay, took effect, the basic pay previously being given as part of the
Christmas bonus was applied as compliance to it (P.D. 851), the allowances remained as Christmas bonus;
3. From 1981 up to 1983, the bank continued giving one month basic pay as mid-year bonus, one month basic pay as
13thmonth pay but the Christmas bonus was no longer based on the allowance but on the basic pay of the
employees which is higher;
4. In the early part of 1984, the bank was placed under conservatorship but it still provided the traditional mid-year
bonus;
 5. By virtue of an alleged Monetary Board Resolution No. 1566, bank only gave a one-half (1/2) month basic pay as
compliance of the 13thmonth pay and none for the Christmas bonus.

Respondents Contention: that the mid-year and Christmas bonuses, by reason of their having been given for thirteen
consecutive years, have ripened into a vested right and, as such, can no longer be unilaterally withdrawn by petitioner
without violating Article 100 of Presidential Decree No. 4429 which prohibits the diminution or elimination of benefits
already being enjoyed by the employees. Although private respondent concedes that the grant of a bonus is discretionary
on the part of the employer, it argues that, by reason of its long and regular concession, it may become part of the
employees regular compensation.

Petitioner asserts: that it cannot be compelled to pay the alleged bonus differentials due to its depressed financial
condition, as evidenced by the fact that in 1984 it was placed under conservatorship by the Monetary Board. According to
petitioner, it sustained losses in the millions of pesos from 1984 to 1988, an assertion which was affirmed by the labor
arbiter. Moreover, petitioner points out that the collective bargaining agreement of the parties does not provide for the
payment of any mid-year or Christmas bonus. On the contrary, section 4 of the collective bargaining agreement states that

Acts of Grace. Any other benefits or privileges which are not expressly provided in this Agreement, even if now accorded
or hereafter accorded to the employees, shall be deemed purely acts of grace dependent upon the sole judgment and
discretion of the BANK to grant, modify or withdraw.

A bonus is an amount granted and paid to an employee for his industry and loyalty which contributed to the success of the
employers business and made possible the realization of profits. It is an act of generosity granted by an enlightened
employer to spur the employee to greater efforts for the success of the business and realization of bigger profits.

The granting of a bonus is a management prerogative, something given in addition to what is ordinarily received
by or strictly due the recipient. Thus, a bonus is not a demandable and enforceable obligation, except when it is
made part of the wage, salary or compensation of the employee. However, an employer cannot be forced to
distribute bonuses which it can no longer afford to pay. To hold otherwise would be to penalize the employer for
his past generosity.

24. G.R. No. 180866 March 2, 2010

LEPANTO CERAMICS, INC., Petitioner,
vs.
LEPANTO CERAMICS EMPLOYEES ASSOCIATION, Respondent.

PEREZ, J.:

FACTS:

2 March 2010 | Carpio, J.

FACTS

1998 Petitioner, engaged in buying and selling ceramic tiles and similar products, gave 3,000 bonus to employees who
are members of Lepanto Ceramics Employee Association (LCAE), a legitimate labor organization.

1999 Their CBA: Grants Christmas package/bonus for members of the Respondents. The Christmas bonus was one of
the enumerated existing benefit, practice of traditional rights which shall remain in full force and effect.

Provision of the CBA were as follows:

 Section 8. All other existing benefits, practice of traditional rights consisting of Christmas Gift package/bonus,
reimbursement of transportation expenses in case of breakdown of service vehicle and medical services and safety
devices by virtue of company policies by the UNION and employees shall remain in full force and effect.

Section 1. EFFECTIVITY. This agreement shall become effective on September 1, 1999 and shall remain in full force
and effect without change for a period of four (4) years or up to August 31, 2004 except as to the representation aspect
which shall be effective for a period of five (5) years. It shall bind each and every employee in the bargaining unit
including the present and future officers of the Union.

In 1999, 2000 and 2001, the bonus was not in cash. Instead, the Petitioner gave each of the members of Respondents Tile.
Redemption Certificates equivalent to P3,000.00. The bonus for the year 2002 is the root of the present dispute. Petitioner
gave a year-end cash benefit of P600 and offered a cash advance to interested employees equivalent to one (1) month
salary payable in one year. The Respondents objected and argued that this was in violation of the CBA it executed with
the petitioner.

Settlement, mediation failed. In voluntary arbitration, Respondents noted that in a speech during the Christmas
celebration, one of the companys top executives assured the employees of said bonus. However, the Human Resources
Development Manager informed them that the traditional bonus would not be given as the companys earnings were
intended for the payment of its bank loans.

Petitioner argues that:

1. Extra compensation was based on available resources for a given year and the workers are not entitled to a bonus if
the company does not make profits.
2. Petitioner incurred net losses for the years 2001 and 2002 totaling to P1.5 billion; and since 1999, when the CBA was
signed, the companys accumulated losses amounted to over P2.7 billion.
3. Grant of a one (1) month salary cash advance was not meant to take the place of a bonus but was meant to show the
companys sincere desire to help its employees despite its precarious financial condition.
4. CBA provision on a Christmas gift/bonus refers to alternative benefits.
5. Even if CBA contained an unconditional obligation to grant the bonus, the present difficult economic times had
already legally released it therefrom pursuant to Article 1267 of the Civil Code.

Voluntary arbitrator, CA, and now SC all rule for Respondents.

ISSUE/S:

WON Petitioner is required to pay the Respondents Christmas bonus YES

HELD:

By definition, a bonus is a gratuity or act of liberality of the giver. It is something given in addition to what is ordinarily
received by or strictly due the recipient. A bonus is granted and paid to an employee for his industry and loyalty which
contributed to the success of the employer's business and made possible the realization of profits. A bonus is also granted
by an enlightened employer to spur the employee to greater efforts for the success of the business and realization of bigger
profits. Generally, a bonus is not a demandable and enforceable obligation. For a bonus to be enforceable, it must have
been promised by the employer and expressly agreed upon by the parties. Given that the bonus in this case is integrated in
the CBA, the same partakes the nature of a demandable obligation. Verily, by virtue of its incorporation in the CBA, the
Christmas bonus due to respondent Association has become more than just an act of generosity on the part of the
petitioner but a contractual obligation it has undertaken.

A CBA refers to a negotiated contract between a legitimate labor organization and the employer, concerning wages, hours
of work and all other terms and conditions of employment in a bargaining unit. As in all other contracts, the parties to a
CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided these are not
contrary to law, morals, good customs, public order or public policy.

Terse and clear, the said provision did not state that the Christmas package shall be made to depend on the petitioner's
financial standing. The records are also bereft of any showing that the petitioner made it clear during CBA negotiations
that the bonus was dependent on any condition. Indeed, if the petitioner and respondent Association intended that the
P3,000.00 bonus would be dependent on the company's earnings, such intention should have been expressed in the CBA.

The principle of non-diminution of benefits is founded on the constitutional mandate to protect the rights of workers and
to promote their welfare and to afford labor full protection. Hence, absent any proof that petitioners consent was vitiated
by fraud, mistake or duress, it is presumed that it entered into the CBA voluntarily and had full knowledge of the contents
thereof and was aware of its commitments under the contract.

25. G.R. No. 187887 September 7, 2011

PAMELA FLORENTINA P. JUMUAD, Petitioner,
vs.
HI-FLYER FOOD, INC. and/or JESUS R. MONTEMAYOR, Respondents.

MENDOZA, J.:

FACTS:

Pamela Florentina Jumuad was employed as Area Manager in Visayas by Hi-Flyer, Inc., the company managing
Kentucky Fried Chicken stores throughout the country. Later on, the company discovered lapses on the part of Jumuad in
doing her job. Jumuad was given the opportunity to explain the reason these. Nonetheless, the company still terminated
her employment on the ground of neglect of duty and breach of trust and confidence. This prompted Jumuad to file a
complaint against Hi-Flyer for illegal dismissal.

LA RULING: After finding that no serious cause for termination existed, the LA ruled that Jumuad was illegally
dismissed.

NLRC RULING: Affirmed the LA

CA RULING: Reversed the NLRC. CA was of the opinion that the requirements of substantive and procedural due
process were complied with affording Jumuad an opportunity to be heard first, when she submitted her written
explanation and then, when she was informed of the decision and the basis of her termination.

ISSUE/S:

WoN Jumuad was illegally dismissed.

HELD:

NO. As long as there is some basis for loss of confidence, such as when the employer has reasonable ground to believe
that the employee concerned is responsible for the purported misconduct, and the nature of his participation therein
renders him unworthy of the trust and confidence demanded of his position, a managerial employee may be dismissed.

Here, there is ample evidence that Jumuad indeed committed acts justifying loss of trust and confidence of Hi-Flyer,
which resulted to her dismissal from service. Her mismanagement and negligence in supervising the effective operation of
KFC branches in the span of less than a year, resulting in the closure of KFC-Gaisano due to deplorable sanitary
conditions, cash shortages in KFC-Bohol, in which the said branch, at the time of discovery, was only several months into
operation, and the poor sanitation at KFC-Cocomall. The glaring fact that three (3) out of the seven (7) branches under her
area were neglected cannot be glossed over by her explanation that there was no negligence on her part as the sanitation
problem was structural, that she had been usually busy conducting management team meetings in several branches of
KFC in her area or that she had no participation whatsoever in the alleged cash shortages.
As the employer, Hi-Flyer has the right to regulate, according to its discretion and best judgment, all aspects of
employment, including work assignment, working methods, processes to be followed, working regulations, transfer of
employees, work supervision, lay-off of workers and the discipline, dismissal and recall of workers.

26. G.R. No. 149433 December 15, 2010

THE COCA-COLA EXPORT CORPORATION, Petitioner,
vs.
CLARITA P. GACAYAN, Respondent.

LEONARDO-DE CASTRO, J.:

FACTS:

Gacayan is a Senior Financial Accountant of Coca-Cola. Under Coca-Colas policy, one of the benefits enjoyed by its
employees was the reimbursement of meal and transportation expenses incurred while rendering overtime work.

Petitioner company sent respondent Gacayan several memoranda requiring her to explain why her claims for
reimbursement should not be considered fraudulent since there were alterations in the dates and prices thereof.
Consequently, respondent Gacayan submitted her explanation denying any personal knowledge in the commission of the
alterations on the subject receipts.

Petitioner company then conducted a hearing and formal investigation, such eventually led to the dismissal of Gacayan for
fraudulently submitting tampered and/or altered receipts in support of her petty cash reimbursements in gross violation of
the company rules and regulations.

On June 6, 1995, respondent Gacayan filed a complaint with the NLRC. In a Decision dated June 17, 1996, the Labor
Arbiter dismissed respondent Gacayan complaint for lack of merit. This was affirmed by the NLRC in its Resolution
dated April 14, 1998.

On appeal, the Court of Appeals reversed the NLRC and ruled that the penalty imposed on respondent Gacayan was too
harsh. The Court of Appeals ordered the immediate reinstatement of respondent Gacayan to her former position or to a
substantially equivalent position without loss of seniority rights and with full backwages.

In a petition for review on certiorari, the Supreme Court denied Coca-cola petition and ruled that Clarita P. Gacayan was
illegally dismissed from her employment with petitioner company.

Petitioner company now begs the Supreme Court to reconsider this pronouncement, arguing that respondent Gacayan
position as a "Senior Financial Accountant with the Job Description of a Financial Project Analyst" has duties which
clearly qualify her as one occupying a position of trust and responsibility.

ISSUE/S:

Whether or not Gacayan occupies a position of trust and responsibility.

HELD:

YES. It is well-settled that loss of trust and confidence constitutes a just and valid cause for an employee termination.

Respondent Gacayan was the Senior Financial Accountant of petitioner company. While respondent Gacayan denies that
she is handling or has custody of petitioner funds, a re-examination of the records of this case reveals that she indeed
handled delicate and confidential matters in the financial analyses and evaluations of the action plans and strategies of
petitioner company. Respondent Gacayan was also privy to the strategic and operational decision-making of petitioner
company, a sensitive and delicate position requiring the latter utmost trust and confidence. As such, she should be
considered as holding a position of responsibility or of trust and confidence.

The findings of the Labor Arbiter, as affirmed by the NLRC indicates that respondent Gacayan betrayed the trust and
confidence reposed on her when she, ironically a Senior Financial Accountant tasked with ensuring financial
reportorial/regulatory compliance from others, repeatedly submitted tampered or altered receipts to support her claim for
meal reimbursements, in gross violation of the rules and regulations of petitioner company. Upon review, even the Court
of Appeals did not absolve respondent Gacayan of wrongdoing but rather merely held that dismissal was too harsh a
penalty for her infraction.
It has oft been held that loss of confidence should not be used as a subterfuge for causes which are illegal, improper and
unjustified. It must be genuine, not a mere afterthought to justify an earlier action taken in bad faith. It bears stressing that
what is at stake here are the sole means of livelihood, the name and the reputation of the employee. Thus, petitioner
company must sufficiently and convincingly show that the loss of trust and confidence in respondent Gacayan was
founded on clearly established facts, incidents and substantial evidence.

Respondent Gacayan intentionally, knowingly, purposely, and without justifiable excuse, submitted tampered or altered
receipts to support her claim for meal reimbursement. Respondent Gacayan failed to sufficiently refute the charges against
her for the submission of said fraudulent items of expense. All she did was to deny any personal knowledge in the
commission of the alterations in the subject receipts and to point fingers at other people who may have done the
alterations.

Although the amounts involved in the subject receipts were relatively small, or only the dates and/or items ordered were
altered or tampered with, respondent Gacayan act of submitting fraudulent items of expense adversely reflected on her
integrity and honesty, which is ample basis for petitioner company to lose its trust and confidence in her

27. G.R. No. 182086 November 24, 2010

BEBINA G. SALVALOZA, representing her late husband, GREGORIO SALVALOZA, Petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, GULF PACIFIC SECURITY AGENCY, INC., and ANGEL
QUIZON, Respondents.

NACHURA, J.:

FACTS:

Gregorio filed a complaint against Gulf Pacific for illegal dismissal with claim for underpayment of wages, non-payment
of overtime pay, holiday pay, premium pay for holiday and rest day, service incentive leave pay, 13th month pay,
damages, and attorneys fees before the National Labor Relations Commission (NLRC). Gregorio contended that he was
given only a monthly salary ofP4,000.00, way below the rate prescribed by the Philippine Association of Detective and
Protective Agency Operators (PADPAO), which was P13,000.00 toP14,000.00 per month. Gulf Pacific alleged that he
failed to renew his license as a security guard. At the end of the proceeding, the Labor Arbiter ruled in favour of Gregorio.
Gulf pacific appealed to the NLRC.

The NLRC reversed the LA, and the Court of Appeals likewise upholding the reversal. Thus, petitioner files the instant
case.

ISSUE/S:

Whether or not the CA erred in holding that Gregorio was illegally dismissed.

HELD:

The petition has partial merit.

LABOR LAW: Termination

In termination cases, the burden of proving just cause for dismissing an employee is on the employer. It contends that
Gulf Pacific and Quizon failed to discharge this burden when they claimed that Gregorios employment was severed for
his failure to renew his security guard license, for his alleged inefficiency at work, and for his submission of a spurious
security guard license.

On this note, contrary to the posture of Gregorio, we hold that a security guard has the personal responsibility to obtain his
license. Notwithstanding the practice of some security agencies to procure the licenses of their security guards for a fee, it
remains the personal obligation of a security guard to ensure that he or she has a valid and subsisting license to be
qualified and available for an assignment. Thus, when Gregorio was given the Memorandum dated August 2, 2001,
directing him to complete his 201 file requirements, it meant that he had to submit each and every document to show his
qualifications to work as a security guard, most important of which is his security guard license. Thus, his excuse that he
was not informed that he already had an expired license and had to renew the same cannot be sustained. He should have
known when his license was to expire.

LABOR LAW: Constructive dismissal

There is constructive dismissal if an act of clear discrimination, insensibility, or disdain by an employer becomes so
unbearable on the part of the employee that it would foreclose any choice except to forego continued employment. It
exists when there is cessation of work because continued employment is rendered impossible, unreasonable, or unlikely,
as an offer involving a demotion in rank and a diminution in pay.

Of the three instances when Gregorio was temporarily "off-detailed," we find that the last two already ripened into
constructive dismissal. While we acknowledge that Gregorios service record shows that his performance as a security
guard was below par, we join the LA in his finding that Gulf Pacific never issued any memo citing him for the alleged
repeated errors, inefficiency, and poor performance while on duty, and instead continued to assign him to various posts.
This amounts to condonation by Gulf Pacific of whatever infractions Gregorio may have committed.

PARTIALLY GRANTED. Separation pay, not reinstatement.

28. PHILIPPINE LONG DISTANCE TELEPHONE COMPANYv.JOEY B. TEVES

G.R. No. 143511, 15 November 2010

FACTS:

Joey Teves (Teves) was employed by petitioner Philippine Long Distance Telephone Company (PLDT) in 1981 as Clerk
II until his termination from service on June 1, 1992. PLDT terminated Teves through an Inter-Office Memorandum dated
May 29, 1992 on account of his three (3) unauthorized leaves of absence committed within three (3) years in violation of
petitioners rules and regulations.

Teves first absence was from August 23 to September 3, 1990 as his wife gave birth on August 25 but was only
discharged from the hospital on September 2 due to complications. Teves called through a third party to inform PLDT that
he will go on an extended leave. His second absence was from May 29 to June 12, 1991. Teves, upon reporting back to
work, explained that his absences were due to the fact that his eldest and youngest daughters were sick and had to be
confined. The third absence occurred after eight months when Teves availed of a seven-day leave of absence and extended
such leave to complete his annual vacation leave, which was on February 11, 1992. However, Teves failed to report for
work from February 11 to 19, 1992. In an Inter-Office Memorandum, Teves was terminated from service.

Teves filed a complaint for, among others, illegal dismissal. The Labor Arbiter (LA) ruled that the dismissal is legal.
Teves appealed to the NLRC and the NLRC reversed the LAs ruling. PLDT filed a petition for Certiorari. The Court of
Appeals (CA) affirmed the illegality of Teves dismissal. Hence, this petition.

ISSUE:

Whether there are sufficient grounds for Teves dismissal from service.

RULING:

The petition is partly granted.

Notably, the alleged two prior incidents of Teves unauthorized absences were due to family emergency or sickness.
Teves explanations should have been given a kind consideration by PLDT. An employee cannot anticipate when sickness
or emergencies in the family may happen, thus, he may not be able to give prior notice or seek prior approval of his
absence, but could only do so after the occurrence of the incident.
However, Teves had shown that he had given petitioner prior notice of his absences from August 23 to September 3,
1990. As the NLRC found, petitioner admitted that "on August 23, 1990, Teves called up through a third party to inform
PLDT that he would go on an extended leave." Such admission was even reiterated in PLDTs petition for certiorari filed
with the Supreme Court. Notably, when Teves returned for work on September 4, 1990, he immediately submitted a letter
to petitioner explaining his absence and attaching a medical certificate thereto to attest to the reason of his absence. Thus,
the suspension imposed on him was not proper.

As to Teves second unauthorized absence, while he had relayed his inability to report for work on May 29, 1991 to a co-
employee, who unfortunately did not also report for work, he was negligent in not verifying whether his notice of absence
had reached petitioner, and the duration of his absence. While respondent offered a justifiable reason for his absences
from May 29 to June 12, 1990, i.e., his two daughters were sick and confined at a nearby clinic, however, the court finds
that he failed to give PLDT prior notice of his absence, thus, such absence was properly considered as unauthorized.

Thus, Teves absence from February 11 to 19, 1991 which was made to prolong payment of his demandable financial
obligations in the office, and which absence was found by both the NLRC and the CA to be unjustified, was Teves
second unauthorized absence. The court finds that Teves termination for committing three unauthorized absences within
a three-year period had no basis; thus, there was no valid cause for respondent's dismissal.

Even assuming that Teves absenteeism constitutes willful disobedience, such offense does not warrant respondent's
dismissal. Not every case of insubordination or willful disobedience by an employee reasonably deserves the penalty of
dismissal. There must be a reasonable proportionality between the offense and the penalty.

PLDT's claim that the alleged previous infractions may be used as supporting justification to a subsequent similar offense,
which would merit dismissal, finds no application in this case. Teves absence from August 23 to September 3, 1990 was
justified and not unauthorized as there was prior notice. His absence from May 29 to June 12, 1991, although found to be
unauthorized, was not at all unjustified. Thus, his absence during the period from February 11 to 19, 1991, being the only
unauthorized and unjustified absence and his second unauthorized absence, should not merit the penalty of dismissal.

While management has the prerogative to discipline its employees and to impose appropriate penalties on erring workers,
pursuant to company rules and regulations, however, such management prerogatives must be exercised in good faith for
the advancement of the employers interest and not for the purpose of defeating or circumventing the rights of the
employees under special laws and valid agreements. The Court is wont to reiterate that while an employer has its own
interest to protect, and pursuant thereto, it may terminate an employee for a just cause, such prerogative to dismiss or lay
off an employee must be exercised without abuse of discretion. Its implementation should be tempered with compassion
and understanding. The employer should bear in mind that, in the execution of said prerogative, what is at stake is not
only the employees position, but his very livelihood, his very breadbasket.

Dismissal is the ultimate penalty that can be meted to an employee. Even where a worker has committed an infraction, a
penalty less punitive may suffice, whatever missteps maybe committed by labor ought not to be visited with a
consequence so severe. This is not only the laws concern for the workingman. There is, in addition, his or her family to
consider. Unemployment brings untold hardships and sorrows upon those dependent on the wage-earneD.

29. PAL v. NLRC & Quijano

G.R. No. 123294, 20 October 2010

FACTS:

An investigating committee chaired by Leslie W. Espino formally charged Quijano as Manager-ASAD in connection with
the processing and payment of commission claims to Goldair Pty. Ltd. wherein PAL overpaid commissions to the latter.

Pending further investigation, the Espino Committee placed Quijano under preventive suspension and at the same time
required her to submit her answer to the charges.

Another Administrative charge involving the same Goldair anomaly was filed, this time including Committee Chairman
Leslie W. Espino and Committee Member Romeo R. Ines and several others, for "gross incompetence and inefficiency,
negligence, imprudence, mismanagement, dereliction of duty, failure to observe and/or implement administrative and
executive policies, and related acts or omissions." Pending the result of investigation by another committee chaired by
Judge Martin S. Ocampo, the PAL Board of Directors suspended respondents.

The Ocampo Committee having submitted its findings to the PAL Board of Directors, the latter considered respondents
resigned from the service effective immediately, for loss of confidence and for acts inimical to the interest of the
company.

Her motion for reconsideration having been denied by the Board, Quijano filed the instant case against PAL for illegal
suspension and illegal dismissal.

The Labor Arbiter dismissed private respondents complaint. Undeterred, private respondent filed an appeal before the
NLRC which rendered the assailed Decision vacated and set aside. Petitioner filed a Motion for Reconsideration but this
was denied by the NLRC.

ISSUE:

Whether or not respondent is illegally dismissed?

HELD:

At the onset, it should be noted that the parties do not dispute the validity of private respondents dismissal from
employment for loss of confidence and acts inimical to the interest of the employer. The assailed September 29, 1995
Decision of the NLRC was emphatic in declaring that it was "not prepared to rule as illegal the preventive suspension and
eventual dismissal from the service of [private respondent]" and rightfully so because the last position that private
respondent held, Manager-ASAD (Agents Services Accounting Division), undeniably qualifies as a position of trust and
confidence.

Loss of confidence as a just cause for termination of employment is premised from the fact that an employee concerned
holds a position of trust and confidence. This situation holds where a person is entrusted with confidence on delicate
matters, such as the custody, handling, or care and protection of the employers property. But, in order to constitute a just
cause for dismissal, the act complained of must be "work-related" such as would show the employee concerned to be unfit
to continue working for the employer.

As a general rule, employers are allowed a wider latitude of discretion in terminating the employment of managerial
personnel or those who, while not of similar rank, perform functions which by their nature require the employers full trust
and confidence. This must be distinguished from the case of ordinary rank and file employees, whose termination on the
basis of these same grounds requires a higher proof of involvement in the events in question; mere uncorroborated
assertions and accusations by the employer will not suffice.

The language of Article 279 of the Labor Code is pregnant with the implication that a legally dismissed employee is not
entitled to separation pay, to wit:

An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the time of his actual reinstatement.

However, in exceptional cases, this Court has granted separation pay to a legally dismissed employee as an act of "social
justice" or based on "equity." In both instances, it is required that the dismissal (1) was not for serious misconduct; and (2)
does not reflect on the moral character of the employee or would involve moral turpitude. This equitable and humanitarian
principle was first discussed by the Court in the landmark case of Philippine Long Distance Telephone Co. (PLDT) v.
National Labor Relations Commission.

Serious misconduct as a valid cause for the dismissal of an employee is defined simply as improper or wrong conduct. It
is a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character,
and implies wrongful intent and not mere error of judgment. To be serious within the meaning and intendment of the law,
the misconduct must be of such grave and aggravated character and not merely trivial or unimportant. However serious
such misconduct, it must, nevertheless, be in connection with the employees work to constitute just cause for his
separation. The act complained of must be related to the performance of the employees duties such as would show him to
be unfit to continue working for the employer. On the other hand, moral turpitude has been defined as "everything which
is done contrary to justice, modesty, or good morals; an act of baseness, vileness or depravity in the private and social
duties which a man owes his fellowmen, or to society in general, contrary to justice, honesty, modesty, or good morals."

In the case at bar, the transgressions imputed to private respondent have never been firmly established as deliberate and
willful acts clearly directed at making petitioner lose millions of pesos. At the very most, they can only be characterized
as unintentional, albeit major, lapses in professional judgment. Likewise, the same cannot be described as morally
reprehensible actions. Thus, private respondent may be granted separation pay on the ground of equity which this Court
had defined as "justice outside law, being ethical rather than jural and belonging to the sphere of morals than of law. It is
grounded on the precepts of conscience and not on any sanction of positive law, for equity finds no room for application
where there is law."

DENIED.

30. L.M. ALCANTARA v. PCI BANK

G.R. No. 151349, 20 October 2010

FACTS:

The petitioner, Leandro M. Alcantara, had been an employee of PCIB from August 15, 1974.

Respondents alleged that on December 12, 1997, a certain Romy Espiritu called the office of Ms. Ana Lim of its
Customer Care reporting the alleged involvement of the [petitioner] with a big syndicate. Two Certificates of Time
Deposit (CTD) issued by PCIB were allegedly being used by the syndicate in their illegal activities.

The [petitioner] was dismissed from employment because it was allegedly determined that the [petitioner] took advantage
of the trust and confidence reposed in his position as branch manager and "falsified Bank records in order to facilitate a
transaction amounting toP538,360,000.00 that was prejudicial to the welfare and interest of the Bank".

Petitioner filed with the Regional Arbitration Branch of the NLRC a complaint for illegal dismissal among others.

Labor Arbiter dismissed petitioners complaint for illegal dismissal for lack of merit in a Decision wherein it was held that
there was substantial evidence that petitioner manipulated the records of respondent to facilitate the anomalous
transactions of the members of the alleged criminal syndicate.

Petitioner appealed the Labor Arbiters Decision. However, the NLRC affirmed the same and dismissed petitioners appeal
for lack of merit in a Resolution. Undaunted, petitioner filed a Motion for Reconsideration but the same was denied by the
NLRC in a Resolution. Thus, petitioner filed a petition forcertiorariunder Rule 65 of the Rules of Court. This petition was
dismissed by the Court of on account of petitioners failure to attach the material portions of the records of the NLRC case,
and various relevant or pertinent documents, in accordance with paragraph 3, Section 3, Rule 46 of the 1997 Revised
Rules of Civil Procedure.Petitioner subsequently filed a Motion for Reconsideration but this was denied by the Court of
Appeals in a Resolution.

ISSUE:

Whether or not petitioner is illegally dismissed?

HELD:

Loss of confidence as a just cause for termination of employment is premised from the fact that an employee concerned
holds a position of trust and confidence. This situation holds where a person is entrusted with confidence on delicate
matters, such as the custody, handling, or care and protection of the employer's property. But, in order to constitute a just
cause for dismissal, the act complained of must be "work-related" such as would show the employee concerned to be unfit
to continue working for the employer.
As Branch Manager of the Rizal Avenue-Doroteo Jose Branch of the respondent bank, petitioner undoubtedly held a
position of trust and confidence. Furthermore, the June 18, 1998 Decision of respondents Bankwide Evaluation
Committee, the relevant portions of which are discussed in the narration of the facts of this case as culled from the March
26, 2001 NLRC Resolution, clearly laid out the reasons why it imposed on petitioner, "the principal penalty of
DISMISSAL FROM EMPLOYMENT with automatic forfeiture of benefits."

As a general rule, employers are allowed a wider latitude of discretion in terminating the employment of managerial
personnel or those who, while not of similar rank, perform functions which by their nature require the employer's full trust
and confidence. This must be distinguished from the case of ordinary rank and file employees, whose termination on the
basis of these same grounds requires a higher proof of involvement in the events in question; mere uncorroborated
assertions and accusations by the employer will not suffice.

On the issue of due process, it is settled that notice and hearing constitute the essential elements of due process in the
dismissal of employees. The employer must furnish the employee with two written notices before termination of
employment can be legally effected. The first apprises the employee of the particular acts or omissions for which his
dismissal is sought. The second informs the employee of the employers decision to dismiss him. With regard to the
requirement of a hearing, the essence of due process lies simply in an opportunity to be heard, and not that an actual
hearing should always and indispensably be held.

Judging from the aforementioned undisputed sequence of events, it is apt to conclude that respondent more than acted in
accordance with the due process required in the termination of an employee. It gave petitioner considerable leeway with
regard to the submission of his written explanation by allowing multiple extensions of time to submit the same and by
furnishing him the documents used in respondents investigation. Ultimately, even assuming that he was not fully heard
during the employers investigation, it was petitioner's fault because of his misguided insistence on having a trial-type
hearing despite established jurisprudence stating that the mere opportunity to be heard would suffice as due process in
administrative proceedings. In any event, petitioner was given full opportunity to prove his claim of illegal dismissal
before the Labor Arbiter and the NLRC but he still failed to discharge his burden of proof.

DENIED

31. EDGARDO M. PANGANIBAN v. TARA TRADING SHIP MANAGEMENT

G.R. No. 187032, 18 October 2010
FACTS:

In November 2005, petitioner was hired by respondent Tara Trading Ship Management, Inc. (Tara),in behalf of its foreign
principal, respondent Shinline SDN BHD(Shinline)to work as an Oiler on board MV Thailine 5 with a monthly salary of
US$409.00.

Sometime in April 2006, petitioner began exhibiting signs of mental instability. He was repatriated on May 24, 2006for
further medical evaluation and management.

Petitioner was referred by respondents to the Metropolitan Medical Center where he was diagnosed to be suffering from
brief psychotic disorder.

Despite his supposed total and permanent disability and despite repeated demands for payment of disability compensation,
respondents allegedly failed and refused to comply with their contractual obligations.

Hence, petitioner filed a Complaint against respondents praying for the payment of US$60,000.00 as total and permanent
disability benefits, reimbursement of medical and hospital expenses, moral and exemplary damages, and attorneys fees
equivalent to 10% of total claims.

Respondents, on the other hand, maintained that petitioner requested for an early repatriation and arrived at the point of
hire on May 24, 2006; that while on board the vessel, he confided to a co-worker, Henry Santos, that his eating and
sleeping disorders were due to some family problems; that Capt. Zhao, the master of the vessel, even asked him if he
wanted to see a doctor; that he initially declined; that on May 22, 2006, petitioner approached Capt. Zhao and requested
for a vacation and early repatriation; that the said request was granted; that upon arrival, petitioner was subjected to a
thorough psychiatric evaluation; and that after a series of check-ups, it was concluded that his illness did not appear to be
work-related. Respondents argued that petitioner was not entitled to full and permanent disability benefits under the
Philippine Overseas Employment Administration Standard Employment Contract(POEA SEC)because there was no
declaration from the company-designated physician that he was permanently and totally disabled and that the claim for
damages was without basis as no bad faith can be attributed to them.

On September 17, 2007, the LA ruled in favor of the petitioner.

Respondents appealed to the NLRC. On March 25, 2008, the NLRC affirmed the decision of the LA. The appeal of
respondents was dismissed for lack of merit. Respondents filed a motion for reconsideration but it was denied in a
resolution dated April 30, 2008.

Aggrieved, respondents filed a Petition for Certiorari with prayer for the issuance of a writ of preliminary injunction
and/or temporary restraining order with the CA.

On October 29, 2008, the CA reversed the decision of the NLRC. Petitioners Motion for Reconsideration was denied by
the CA in its Resolution dated March 4, 2009. Hence, this petition.

ISSUES:

Whether or not the CA is correct in denying petitioners entitlement to full and total disability benefits amounting to
US$60,000.00.

HELD:

Although strict rules of evidence are not applicable in claims for compensation and disability benefits, the Court cannot
just disregard the provisions of the POEA SEC. Significantly, a seaman is a contractual and not a regular employee. His
employment is contractually fixed for a certain period of time. Petitioner and respondents entered into a contract of
employment. It was approved by the POEA on October 25, 2005and, thus, served as the law between the parties.
Undisputedly, Section 20-B of the POEA Amended Standard Terms and Conditions Governing the Employment of
Filipino Seafarers on Board Ocean-Going Vessels (POEA-SEC) provides for compensation and benefits for injury or
illness suffered by a seafarer. It says that, in order to claim disability benefits under the Standard Employment Contract, it
is the company-designated physician who must proclaim that the seaman suffered a permanent disability, whether total or
partial, due to either injury or illness, during the term of the latters employment. In German Marine Agencies, Inc. v.
NLRC, the Courts discussion on the seafarers claim for disability benefits is enlightening. Thus:

In order to claim disability benefits under the Standard Employment Contract, it is the company-designated physician who
must proclaim that the seaman suffered a permanent disability, whether total or partial, due to either injury or illness,
during the term of the latters employment. There is no provision requiring accreditation by the POEA of such physician.
In fact, aside from their own gratuitous allegations, petitioners are unable to cite a single provision in the said contract in
support of their assertions or to offer any credible evidence to substantiate their claim. If accreditation of the company-
designated physician was contemplated by the POEA, it would have expressly provided for such a qualification, by
specifically using the term accreditation in the Standard Employment Contract, to denote its intention. For instance, under
the Labor Code, it is expressly provided that physicians and hospitals providing medical care to an injured or sick
employee covered by the Social Security System or the Government Service Insurance System must be accredited by the
Employees Compensation Commission. It is a cardinal rule in the interpretation of contracts that if the terms of a contract
are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall
control.There is no ambiguity in the wording of the Standard Employment Contract the only qualification prescribed for
the physician entrusted with the task of assessing the seamans disability is that he be company-designated. When the
language of the contract is explicit, as in the case at bar, leaving no doubt as to the intention of the drafters thereof, the
courts may not read into it any other intention that would contradict its plain import.

In this case, the findings of respondents designated physician that petitioner has been suffering from brief psychotic
disorder and that it is not work-related must be respected.
The Court commiserates with the petitioner, but absent substantial evidence from which reasonable basis for the grant of
benefits prayed for can be drawn, the Court is left with no choice but to deny his petition, lest an injustice be caused to the
employer. Otherwise stated, while it is true that labor contracts are impressed with public interest and the provisions of the
POEA SEC must be construed logically and liberally in favor of Filipino seamen in the pursuit of their employment on
board ocean-going vessels, still the rule is that justice is in every case for the deserving, to be dispensed with in the light
of established facts, the applicable law, and existing jurisprudence.

Lastly, it appears premature at this time to consider petitioners disability as permanent and total because the severity of his
ailment has not been established with finality to render him already incapable of performing the work of a seafarer. In
fact, the medical expert termed his condition as brief psychotic disorder. The Court also takes note, as the CA correctly
did, that petitioner did not finish his treatment with the company-designated physician, hence, there is no final evaluation
yet on petitioner.

All told, no reversible error was committed by the CA in rendering the assailed Decision and issuing the questioned
Resolution.

CA AFFIRMED.

32. COCA-COLA BOTTLERS PHIL. INC. v. ANGEL U. DEL VILLAR

G.R. No. 163091, 6 October 2010

FACTS:

In 1992, as part of the reorganization of the Company, Del Villar became the Transportation Services Manager, under the
Business Logistic Directorate, headed by Director Edgardo I. San Juan (San Juan). As Transportation Services Manager,
Del Villar prepares the budget for the vehicles of the Company nationwide.

While serving as Transportation Services Manager, Del Villar submitted a Report to the Company President, Natale J. Di
Cosmo (Di Cosmo), detailing an alleged fraudulent scheme undertaken by certain Company officials in conspiracy with
local truck manufacturers, overpricing the trucks purchased by the Company by as much asP70,000.00 each. In the same
Report, Del Villar implicated San Juan and Jose L. Pineda, Jr. (Pineda), among other Company officials, as part of the
conspiracy.

After the Company embarked on a reorganization of the Business Logistic Directorate, was was then appointed as the
Corporate Purchasing and Materials Control Manager, while Del Villar as Pinedas Staff Assistant.

Seven months after he submitted his report on the fraudulent scheme, Del Villar received a memorandum from San Juan,
informing him of his designation as Staff Assistant to the Corporate Purchasing and Materials Control Manager. With this
new assignment, Del Villar ceased to be entitled to the benefits accruing to an S-7 position under existing company rules
and policies and he was ordered to turn over the vehicle assigned to him as Transportation Services Manager to Pineda.

Del Villar believed that he was demoted by the Company to force him to resign. Unable to endure any further the
harassment, Del Villar filed with the Arbitration Branch of the NLRC on November 11, 1996 a complaint against the
Company for illegal demotion and forfeiture of company privileges.

The Company filed a Motion to Dismiss, instead of a position paper, praying for the dismissal of Del Villars complaint on
the ground that Del Villar had no cause of action.

The Labor Arbiter rendered a Decision in Del Villars favor. The Labor Arbiter held that the allegations in Del Villars
complaint sufficiently presented a cause of action against the Company. The company appealed to the NLRC. Pending the
appeal, Del Villar received a letter from the company, stating that his services are no longer needed by the company.
Thereafter, the NLRC reversed the ruling of the LA. Unsatisfied, Del Villar brought his case before the Court of
Appealsviaa Petition for Certiorari.

The appellate court ruled in favor of Del Villar. Petitioner filed a motion for reconsideration but the same was denied.
Hence, this petition.
ISSUE:

Whether or not Del Villar was demoted and the company acted in bad faith

HELD:

In the pursuit of its legitimate business interest, management has the prerogative to transfer or assign employees from one
office or area of operation to another provided there is no demotion in rank or diminution of salary, benefits, and other
privileges; and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or
demotion without sufficient cause.

In the case at bar, there is no dispute that Del Villar was transferred by the Company from the position of Transportation
Services Manager to the position of Staff Assistant to the Corporate Purchasing and Materials Control Manager. The
burden thus falls upon the Company to prove that Del Villars transfer was not tantamount to constructive dismissal. After
a careful scrutiny of the records, we agree with the Labor Arbiter and the Court of Appeals that the Company failed to
discharge this burden of proof.

The Company and its officials attempt to justify the transfer of Del Villar by alleging his unsatisfactory performance as
Transportation Services Manager. The dismal performance evaluations of Del Villar were prepared by San Juan and
Pineda after Del Villar already implicated his two superiors in his Report dated January 4, 1996 in an alleged fraudulent
scheme against the Company. More importantly, we give weight to the following instances establishing that Del Villar
was not merely transferred from the position of Transportation Services Manager to the position of Staff Assistant to the
Corporate Purchasing and Materials Control Manager; he was evidently demoted.

A transfer is a movement from one position to another which is of equivalent rank, level or salary, without break in
service. Promotion, on the other hand, is the advancement from one position to another with an increase in duties and
responsibilities as authorized by law, and usually accompanied by an increase in salary. Conversely, demotion involves a
situation where an employee is relegated to a subordinate or less important position constituting a reduction to a lower
grade or rank, with a corresponding decrease in duties and responsibilities, and usually accompanied by a decrease in
salary.

Del Villars demotion is readily apparent in his new designation. Formerly, he was the Transportation Services Manager;
then he was made a Staff Assistant a subordinate to another manager, particularly, the Corporate Purchasing and Materials
Control Manager.

The two posts are not of the same weight in terms of duties and responsibilities. Del Villars position as Transportation
Services Manager involved a high degree of responsibility, he being in charge of preparing the budget for all of the
vehicles of the Company nationwide. As Staff Assistant of the Corporate Purchasing and Materials Control Manager, Del
Villar contended that he was not assigned any meaningful work at all. The Company utterly failed to rebut Del Villars
contention. It did not even present, at the very least, the job description of such a Staff Assistant.

While Del Villar's transfer did not result in the reduction of his salary, there was a diminution in his benefits. The
Company admits that as Staff Assistant of the Corporate Purchasing and Materials Control Manager, Del Villar could no
longer enjoy the use of a company car, gasoline allowance, and annual foreign travel, which Del Villar previously enjoyed
as Transportation Services Manager.

It was not bad enough that Del Villar was demoted, but he was even placed by the Company under the control and
supervision of Pineda as the latters Staff Assistant. To recall, Pineda was one of the Company officials who Del Villar
accused of defrauding the Company in his Report.

Redundancy, for purposes of the Labor Code, exists where the services of an employee are in excess of what is reasonably
demanded by the actual requirements of the enterprise.

The wisdom or soundness of this judgment is not subject to discretionary review of the Labor Arbiter and the NLRC,
provided there is no violation of law and no showing that it was prompted by an arbitrary or malicious act. In other words,
it is not enough for a company to merely declare that it has become overmanned. It must produce adequate proof of such
redundancy to justify the dismissal of the affected employees.

In this case, other than its own bare and self-serving allegation that Del Villars position as Staff Assistant of Corporate
Purchasing and Materials Control Manager had already become redundant, no other evidence was presented by the
Company. Neither did the Company present proof that it had complied with the procedural requirement in Article 283 of
prior notice to the Department of Labor and Employment (DOLE) of the termination of Del Villar's employment due to
redundancy one month prior to May 31, 1998.

There being no authorized cause for the termination of Del Villar's employment, then he was illegally dismissed

33. BRAHM INDUSTRIES, INC. v. NLRC

G.R. No. 118853, 16 October 1997
Facts:

On 8 February 1994 Labor Arbiter Fatima J. Franco ruled that complainants Roberto M. Durian and Jone M.Comendador
were illegally dismissed by BRAHM and accordingly ordered the latter to: (a) reinstate complainants to their former
positions or equivalent positions without loss of seniority rights, but if reinstatement was no longer possible, to pay them
separation pay equivalent to one (1) month for every year of service; (b) pay Roberto M. Durian the amount of Forty-
Eight Thousand Thirty-Eight Pesos and Twenty-Five Centavos (P48,038.25) representing his back wages; and, Jone M.
Comendador the amount of Sixty Thousand Four Hundred Seventy-Four Pesos andNinety-Two Centavos (P60,474.92)
representing his back wages, 13th month pay and service incentive leave pay; and,(c) pay complainants the amount
equivalent to 10% of the total award as attorney's fees.Upon appeal by BRAHM, the NLRC affirmed the decision of the
Labor Arbiter, subject to the modification that the attorney's fees awarded be reduced to five percent (5%) of the total
monetary award.BRAHM now argues that theNLRC gravely abused its discretion when it held that: (a) private
respondents Roberto M. Durian and Jone M. Comendador were regular employees and not merely contractual employees
hired on a per project basis; (b) they were illegally dismissed; and, (c) they were entitled to attorney's fees despite the fact
that the award lacks factual and legal basis.

Issue:

Whether or not private respondents are entitled to attorneys fees.

Held:

Yes. With regard to the propriety of the award of attorney's fees in favor of private respondents, petitioner contends that it
was erroneous for the NLRC to merely reduce the award of attorney's fees when it should have been completely deleted.
Petitioner claims that the award is baseless since the matter of attorney's fees was touched only once in the dispositive
portion of the Labor Arbiter's decision and no discussion or reason was stated therefor.

This argument is unfounded. A perusal of the decision shows that the reason for the award of attorney's fees is clearly and
unequivocally set forth in the body of the Labor Arbiter's decision, to wit Having been compelled to litigate, complainants
should be paid an amount equivalent to ten percent (10%) of the total award as and for attorney's fees." It used as basis
Art. 2208 of the Civil Code which allows attorney's fees to be awarded by a court when its claimant is compelled to
litigate with third persons or to incur expenses to protect his interest by reason of an unjustified act or omission of the
party from whom it is sought. However, nothing precludes the appellate courts from reducing the award of attorney's fees
when it is found to be unconscionable or excessive under the circumstances. Thus, we agree with the NLRC's ruling that
the award of attorney's fees is proper on account of complainants' being compelled to litigate their claims against
respondent. The amount is however reduced to five percent (5%) of the adjudged relief, it appearing that the substantial
portion of the award refers to complainants' back wages and not to withheld salaries. Finally, this Court has consistently
held that findings of fact of administrative agencies and quasi-judicial bodies which have acquired expertise because their
jurisdiction is confined to specific matters are generally accorded not only respect but even finality and are binding upon
this Court unless there is grave abuse of discretion or where it is clearly shown that they were arrived at arbitrarily or in
disregard of the evidence on record. Petitioner failed to convince us that we should depart from this time-honored rule.

34. WISE AND CO., INC. v. WISE & CO., INC. EMPLOYEES UNION-NATU
G.R. No. 87672, 13 October 1989

FACTS:

The management issued a memorandum circular introducing a profit sharing scheme for its managers and supervisors the
initial distribution. The respondent union wrote petitioner asking for participation in this scheme but it was denied by
petitioner on the ground that it had to adhere strictly to the CBA. Petitioner distributed the profit sharing benefit not only
to managers and supervisors but also to all other rank and file employees not covered by the CBA. This caused the
respondent union to file a notice of strike alleging that petitioner was guilty of ULP because the union members were
discriminated against in the grant of the profit sharing benefits. Management refused to proceed with the CBA
negotiations unless the last notice of strike was first resolved. The union agreed to postpone discussions on the profit
sharing demand until a new CBA was concluded. After a series of conciliation conferences, the parties agreed to settle the
dispute through voluntary arbitration. The voluntary arbitrator issued an award ordering petitioner to likewise extend the
benefits of the 1987 profit sharing scheme to the members of respondent union. Hence, this petition.

ISSUE:

Whether the grant by management of profit sharing benefits to its non-union member employees is discriminatory against
its workers who are union members.

HELD:

NO. Under the CBA between the parties, there is a clause where the employees are classified into those who are members
of the union and those who are not. The grant by petitioner of profit sharing benefits to the employees outside the
bargaining unit falls under the ambit of its managerial prerogative. It appears to have been done in good faith and
without ulterior motive. In the case of the union members, they derive their benefits from the terms and conditions of the
CBA contract which constitute the law between the contracting parties. Both the employer and the union members are
bound by such agreement. There can be no discrimination committed by petitioner thereby as the situation of the union
employees are different and distinct from the non-union employees. Indeed, discrimination per se is not unlawful. There
can be no discrimination where the employees concerned are not similarly situated.

35. CRUZ v. HON. MEDINA, ET AL.

G.R. No. 73053, 15 September 1989

FACTS:

Petitioner Dr. Carmelita U. Cruz was the Dean of the Institute of Education and Graduate School at Roosevelt College.
The Board of Trustees had sent Dr. Cruz a Resolution for her to be part of the newly instituted Agro-Forestry Program,
which she refused.

The Board held several meetings to thresh out this problem. During these meetings, Dr. Cruz reiterated her desire to retain
her teaching loads in lieu of handling the Agro-Forestry Program. The Board on the other hand, remained firm on its stand
to enforce its Resolution. Several attempts were made to amicably settle the issue, but to no avail. A deadlock occurred.
On October 19, 1984, the Board issued Dr. Cruz a letter terminating her services.

ISSUE:

Whether or not petitioner is guilty of insubordination resulting in loss of confidence sufficient to warrant a dismissal.

HELD:

YES. Before attempting to resolve this issue, the employment status of petitioner must first be looked into. Petitioner
contends that she was divested of her Deanship of the Graduate School and retained as Dean in the Institute of Education.
This is of no moment. The fact remains that she was a Dean, a position which is on the managerial level. In the case of
Metro Drug Corporation v. NLRC,15 this Court held that managerial personnel and other employees occupying positions
of trust and confidence are entitled to security of tenure, fair standards of employment and the protection of labor laws.
While it is true that the decision to dismiss or lay-off an employee is managements prerogative, it must be made without
abuse of discretion, for what is at stake is not only the employees position but also his means of livelihood.16

However, the rules on termination of employment, penalties for infractions and resort to concerted actions in so far as
managerial employees are concerned are not necessarily the same as those for ordinary employees.17Employers,
generally, are allowed a wider latitude of discretion in terminating the employment of managerial personnel or those of
similar rank performing functions which by their nature require the employers trust and confidence, than in the case of
ordinary rank and file employees.18

With these principles in mind, we find no grave abuse of discretion committed by public respondents in ruling petitioners
dismissal legal. Considering the fact that she was holding a managerial position, her refusal to abide by the lawful orders
of her employers would lead to the erosion of the trust and confidence reposed on her. Loss of confidence is a valid
ground for dismissing an employee and proof beyond reasonable doubt is not required. All that is needed is for the
employer to establish a sufficient basis for the dismissal of an employee. The grant of teaching loads was only a privilege
since as Dean, her first and primary function was to administer the particular college under her care and authority. Hence,
the decision of Roosevelt Colleges to take away her six (6) teaching loads so that she can handle the Agro-Forestry
Program, with the same pay is found to be reasonable and lawful.

36. SAN MIGUEL BREWERY SALES FORCE UNION V. HON. OPLE

FACTS:

A collective bargaining agreement was being implemented by San Miguel Corporation Sales Force Union and San Miguel
Corporation. Section 1, of Article IV of which provided Employees within the appropriate bargaining unit shall be entitled
to a basic monthly compensation plus commission based on their respective sales. Then, the company introduced a
marketing scheme known as Complementary Distribution System (CDS) whereby its beer products were offered for sale
directly to wholesalers through San Miguels Sales Offices. The union alleged that the new marketing scheme violates
Section 1, Art VI of the CBA because the introduction of the CDs would reduce the take home pay of the salesmen.

ISSUE:

Whether or not the new marketing scheme should be upheld considering that the act was unilaterally made by the employer.

HELD:

Yes, because it is a valid exercise of managerial prerogative. So long as a companys management prerogatives are exercised
in good faith for the advancement of the employers interest and not for the purpose of defeating or circumventing the rights
of the employees under special laws or under valid arguments, this court will uphold them. San Miguel Corporations offer
to compensate the members of its sales force who will be adversely affected by the implementation of the CDs by paying
them a so-called back adjustment commission to make up for the commissions they might lose as a result of the CDs
proves the companys good faith and lack of intention to bust their union.

37. SOSITO v. AGUINALDO DEVELOPMENT CORPORATION

FACTS:

Petitioner Manuel Sosito filed for an indefinite leave from the private respondent on January 16, 1976. The private
respondent, through its president, announced a retrenchment program and offered separation pay to employees in the active
service as of June 30, 1976, who would tender their resignations not later than July 31, 1976. The petitioner submitted his
resignation to avail himself of the gratuity benefits promised. However, he was not given the separation pay he expected.

ISSUE:
Whether or not petitioner was entitled to the benefits?

HELD:

The court held that it is clear from the memorandum that the offer of separation pay was extended only to those who were
in the active service of the company as of June 30, 1976. It is equally clear that the petitioner was not eligible for the
promised gratuity as he was not actually working with the company as of the said date. Being on indefinite leave, he was
not in the active service of the private respondent although, if one were to be technical, he was still in its employ. Even so,
during the period of indefinite leave, he was not entitled to receive any salary or to enjoy any other benefits available to
those in the active service.

The court further argued that under the law then in force the private respondent could have validly reduced its work force
because of its financial reverses without the obligation to grant the separation pay.

PART II INSULAR INTERPRETATION

38. INSULAR HOTEL EMPLOYEES UNION-NFL vs. WATER FRONT INSULAR HOTEL DAVAO

FACTS:

Respondent Waterfront Insular Hotel Davao sent the DOLE, a Notice of Suspension of Operations notifying the same that
it will suspend its operations for a period of six months dues to severe and serious business losses. During the period of the
suspension, Domy R. Rojas, the President of Davao Insular Hotel Free Employees Union (DIHFEU-NFL), the recognized
labor organization in Waterfront Davao, sent respondent a number of letters asking management to reconsider its decision.
After series of negotiations, respondent and DIHFEU-NFL, represented by its President and Vice-Presidents signed MOA
wherein respondent agreed to re-open the hotel subject to certain concessions offered by DIHFEU-NFL in its Manifesto.
Darius Joves and Debbie Planas, claiming to be local officers of the NFL, filed a Notice of Mediation before the NCMB.
The issue raised in said Notice was the Diminution of Wages and the other benefits through unlawful MOA. In support of
his authority to file the complaint, Joves, assisted by Atty. Cullo, presented several SPA which were, however, undated and
unnotarized. Respondent filed with the NCMB a Manifestation with Motion for a Secondary Preliminary Conference,
raising the following grounds:

1. The persons who filed the instant complaint in the name of the Insular Hotel Employees Union NFL have no authority
to represent the Union;

2. The individuals who executed the special power of attorney in favor of the person who filed the instant complaint have
no standing to cause the filing of the instant petition.

AVA Montejo ruled in favor of Cullo. Respondent appealed to the CA. CA ruled in favor of respondent. Hence, Cullo filed
a petition.

ISSUE:

Whether or not the individual members of the union have the requisite standing to question the MOA before the NCMB?

HELD:

The court held that the first step to submit a case for mediation is to file a notice of preventive mediation with the NCMB.
Section 3, Rule IV of the NCMB Manual of Procedure provides who may file a notice of a preventive mediation. It is clear
that only a certified or duly recognized bargaining agent may file a notice or request for preventive mediation. It is curious
that even Cullo himself admitted, in a number of pleadings, that the case was filed not by the Union but by individual
members thereof. Clearly, therefore, the NCMB had no jurisdiction to entertain the notice filed before it.
39. MARCOPPER MINING CORPORATION v. NLRC

FACTS:

Marcopper Mining Corporation and respondent NAMAWUMIF, a labor federation duly organized and registered with the
Department of Labor and Employment, to which the Marcopper Employees Union is affiliated entered into a Collective
Bargaining Agreement effective from May 1, 1984 until April 30, 1987. On July 25, 1986, prior to the expiration of the
aforestated Agreement, the petitioner and private respondent executed a MOA wherein the terms of the CBA, specifically
on matters of wage increase and facilities allowance were modified. On June 1, 1987 E.O. No. 178 was promulgated
mandating the integration of the cost of living allowance under Wage Orders No. 1,2,3, 5 and 6 into the basic wage of
workers, its effectivity retroactive to May 1, 1987. Consequently, the basic wage rate of petitioners laborers categorized as
non-agricultural workers was increased by P 9.00 per day. Furthermore, the petitioner implemented the second five interest
(5%) wage increase due on the same date and thereafter added the integrated COLA. However, the private respondent
assailed the manner in which the second wage increase was effected. It argued that the COLA should first be integrated into
the basic wage before the 5% wage increase is computed.

ISSUE:

Whether or not the CBA should comply with.

HELD:

Yes. The principle that the CBA is the law between the contracting parties stands strong and true. However, the present
controversy involves not merely an interpretation of CBA provisions. More importantly, it requires determination of the
effect of an executive order on the terms and the conditions of the CBA. This is, and should be, the focus of the instant case.
It is unnecessary to delve too much on the intention of the parties as to what they allegedly meant by the term "basic wage"
at the time the CBA and MOA were executed because there is no question that as of May 1, 1987, as mandated by E.O. No.
178, the basic wage of workers, or the statutory minimum wage, was increased with the integration of the COLA. As of
said date, then, the term "basic wage" includes the COLA. This is what the law ordains and to which thecollective bargaining
agreement of the parties must conform. Petitioner's arguments eventually lose steam in the light of the fact that compliance
with the law is mandatory and beyond contractual stipulation by and between the parties; thus, whether or not petitioner
intended the basic wage to include the COLA becomes immaterial. There is evidently nothing to construe and to interpret
because the law is clear and unambiguous. Sadly for petitioner, said law, by some uncanny coincidence, retroactively took
effect on the same date the CBA increase became effective. Therefore, there cannot be any doubt that the computation of
the CBA increase on the basis of the "integrated" wage does not constitute a violation of the CBA. While the terms and
conditions of the CBA constitute the law between the parties, it is not an ordinary contract to which is applied the principles
of law governing ordinary contracts. A CBA, as a labor contract within the contemplation of Article 1700 of the Civil Code
of the Philippines which governs the relations between labor and capital, is not merely contractual in nature but impressed
with public interest, hence, it must yield to the common good. As such, it must be construed liberally rather than narrowly
and technically, and the courts must place a practical and realistic construction upon it, giving due consideration to the
context in which it is negotiated and purpose which it is intended to serve

40. GSIS VS CIVIL SERVICE COMMISSION

FACTS:

Dr.Manuel Baradero was a government employee, who occupied the position of Medical Officer IV in the Philippine
Medical Care Commission, until he reached the mandatory age of retirement of 65 years old. He sewed the Philippine Army
as an enlisted man from November 17, 1972 until June 30, 1945. He resumed his government career on January 1, 1976
when he was elected a member of the Sanggunian Bayan of the Municipality of La Castillana, Negros Occidental. As such,
he received per die for every session attended. He resigned from the Sangguniang Bayan on October 10, 1976. On October
20, 1978, he was appointed Medical Officer I at the Philippine Medical Care Commission, where he served until he reached
the compulsary retirement age of 65 years old. Dr. Baradero applied for compulsary retirement with petitioner. He requested
an extension of service from thr CSC to enable him to complete 15 years of government service. This was necessary so that
he may avail of retirement benefits. The request was denied but Dr. Banadero's two- year stint as the member of the
Sangguniang Bayan be considered as creditable service, hence completing the mandatory 15 year service and making him
eligible for retirement benefits. The GSIS contested the resolution and advised that the CSC extend the services of Dr.
Banadero. The CSC issued an order directing the GSIS to implement Resolution No. 90-642. The GSIS filed a motion for
reconsideration of the order which was denied by CSC. The GSIS changed the CSC with grave abuse of discretion in ruling
that: (1) a service rendered on a per diem basis is creditable for purposes of retirement.

ISSUE:

Is government service rendered on a per diem basis creditable for computing the length of service for retirement purposes?

HELD:

No. Compensation is defined by section 1(c) of R.A. No. 157, which amended Section 1(c) of C.A No. 186 (Government
Service Insurance Act), thus:

(C) "Salary, on compensation" shall be construed as to exclude all bonuses, per diems, allowances and overtime pay, on
salary, pay on compensation given in addition to the base pay of the position on rank as fixed by law on regulations.

The law us very clear in its intent to exclude per diem in the definition of "compensation." Originally, per diem was not
among those excluded in the definition of compensation (See section 1(c) of C.A. No. 186), not until the passage of the
amending laws which redefined it to exclude per diem.

The law not only defines the word "compensation," but it also distinguishes it from other forms of remunerations. Such
distinction is significant not only for purposes of computing the contribution of the employers to the GSIS not also
computing the employee's service record and beneits.

41. DITAN VS POEA

FACTS:

Petitioner was recruited by private respondent INTRACOSALES CORPORATION, through its local agent, ASIA
WORLD, the other private respondent, to work in Angola as a wedding supervisor. Arriving in Luanda, capital of Angola,
the petitioner was assigned as an ordinary welder in the INTRACO central maintenance shop. After the following days, he
was informed that would be transferred to Kafunfo. This was the peace where, earlier that year, the rebels had attached and
kidnapped expatriate workers, killing two Filipinos in the raid. Ditan was reluctant to go. However, he was told that he
would be sent home if he refused the new assignment.

Ditan's fears were confirmed. Kafunfo was attacked by the rebels. Ditan was one of the captives of the rebels. When these
were finally released, six days later, Ditan and the other Filipino hostages were back in the Philippines. INTRACO assured
them that they would be given priority in re-employment abroad, and eventually eleven of them were taken back. Ditan
having been excluded, filed a complaint against the private respondents for breach of contract and various other claims. All
these claims were dismissed by POEA. This was affirmed in toto by respondent NLRC in a resolution which is now being
challenged in this petition.

ISSUE:

Whether or not that the claims for breach of contract was valid.

HELD:
The court held that in failing to provide for the safety of the petitioner, the private respondents were clearly remiss in the
discharge of one of the primary duties of the employer. Worse, they not only neglected that duty but indeed deliberately
violated it by actually subjecting and exposing Ditan to a real and demonstrated danger. It does not help to argue that he
was not forced to go to Kafunfo and had the option of coming home. That was a cruel choice, to say the least. The petitioner
had gone to that foreign land in search of a better life that he could share with his loved ones after his stint abroad. That
choice would have required him to come home empty-handed to the disappointment of an expectant family. Furthermore,
the paramount duty of this Court is to render justice through law. The law in this case allows two opposite interpretations,
one strictly in favor of the employers and the other liberally in favor of the worker. The choice is obvious. We find,
considering the totality of the circumstances attending this case, that the petitioner is entitled to relief.

42. PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY,* petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION and GRACE DE GUZMAN, respondents.

FACTS:

PT&T (Philippine Telegraph & Telephone Company) initially hired Grace de Guzman specifically as Supernumerary
Project Worker, for a fixed period from November 21, 1990 until April 20, 1991 as reliever for C.F. Tenorio who went on
maternity leave. She was again invited for employment as replacement of Erlina F. Dizon who went on leave on 2 periods,
from June 10, 1991 to July 1, 1991 and July 19, 1991 to August 8, 1991.

On September 2, 1991, de Guzman was again asked to join PT&T as a probationary employee where probationary period
will cover 150 days. She indicated in the portion of the job application form under civil status that she was single although
she had contracted marriage a few months earlier. When petitioner learned later about the marriage, its branch supervisor,
Delia M. Oficial, sent de Guzman a memorandum requiring her to explain the discrepancy. Included in the memorandum,
was a reminder about the companys policy of not accepting married women for employment. She was dismissed from the
company effective January 29, 1992. Labor Arbiter handed down decision on November 23, 1993 declaring that petitioner
illegally dismissed De Guzman, who had already gained the status of a regular employee. Furthermore, it was apparent that
she had been discriminated on account of her having contracted marriage in violation of company policies.

ISSUE:

Whether the alleged concealment of civil status can be grounds to terminate the services of an employee.

HELD:

Article 136 of the Labor Code, one of the protective laws for women, explicitly prohibits discrimination merely by reason
of marriage of a female employee. It is recognized that company is free to regulate manpower and employment from hiring
to firing, according to their discretion and best business judgment, except in those cases of unlawful discrimination or those
provided by law.

PT&Ts policy of not accepting or disqualifying from work any woman worker who contracts marriage is afoul of the right
against discrimination provided to all women workers by our labor laws and by our Constitution. The record discloses
clearly that de Guzmans ties with PT&T were dissolved principally because of the companys policy that married women
are not qualified for employment in the company, and not merely because of her supposed acts of dishonesty.

The government abhors any stipulation or policy in the nature adopted by PT&T. As stated in the labor code:

ART. 136. Stipulation against marriage. It shall be unlawful for an employer to require as a condition of employment
or continuation of employment that a woman shall not get married, or to stipulate expressly or tacitly that upon getting
married, a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or
otherwise prejudice a woman employee merely by reason of marriage.
The policy of PT&T is in derogation of the provisions stated in Art.136 of the Labor Code on the right of a woman to be
free from any kind of stipulation against marriage in connection with her employment and it likewise is contrary to good
morals and public policy, depriving a woman of her freedom to choose her status, a privilege that is inherent in an individual
as an intangible and inalienable right. The kind of policy followed by PT&T strikes at the very essence, ideals and purpose
of marriage as an inviolable social institution and ultimately, family as the foundation of the nation. Such policy must be
prohibited in all its indirect, disguised or dissembled forms as discriminatory conduct derogatory of the laws of the land not
only for order but also imperatively required.

43. [G.R. No. 79664. August 11, 1992.]

ANDRES VILLAVILLA and ESTER GADIENTE VILLAVILLA, Petitioners, v. COURT OF APPEALS,

SOCIAL SECURITY COMMISSION, REYNALDO MERCADO, and MARCELO COSUCO, Respondents,
SOCIAL SECURITY SYSTEM, intervenor

FACTS:

Arturo Villavilla, son of petitioners, was employed as "tripulante" (crew member) of the fishing boat "F/B Saint
Theresa" from 1974 to September 11, 1977 when the boat sank. Arturo was not among the known survivors.

Herein petitioners filed a petition with the Social Security Commission (SSC) against the owners Reynaldo
Mercado and Marcelino Cosuco for death compensation benefits for failure to register Arturo as their employee.

Social Security System filed a petition for intervention and provided that once employment of Arturo is proved,
the owners will be held liable for damages equivalent to the benefits due to petitioners for failure to report Arturo for
coverage pursuant to Sec. 24 (a) of the Social Security Act.

Cosuco denied the allegations and alleged that he sold the fishing boat to Mercado and did not participate with the
operation and management anymore.

SSC dismissed the petition for lack of cause of action. CA affirmed.

ISSUE: (main) whether Arturo is an employee?

Allegation of the Petitioner:

Arturo was recruited to join as a crew member by Mercado and was told to have P20 daily wage.

HELD: No.

An employee is defined as a person who performs services for an employer in which either or both mental and
physical efforts are used and who receives compensation for such services, where there is an employer-employee
relationship (Pajarillo v. Social Security System)

From the testimonies of witnesses Capt. Pedro Matibag and Gil Chua, a crew member, the arrangement between
the boat owner and the crew members, one of whom was petitioners son, partook of the nature of a joint venture: the
crew members did not receive fixed compensation as they only shared in their catch; they ventured to the sea
irrespective of the instructions of the boat owners, i.e., upon their own best judgment as to when, how long, and where
to go fishing; the boat owners did not hire them but simply joined the fishing expedition upon invitation of the ship
master, even without the knowledge of the boat owner. In short, there was neither right of control nor actual exercise of
such right on the part of the boat owner over his crew members.
 In the undertaking in question, the boat-owners obviously are not responsible for the wage, salary, or fee of the
pilot and crew-members. Their sole participation in the venture is the furnishing or delivery of the equipment used for
fishing, after which, they merely wait for the boats return and receive their share in the catch, if there is any. The
undertaking is in the nature of a joint venture, with the boat-owner supplying the boat and its equipments (sic), and the
pilot and crew-members contributing the necessary labor, and the parties getting specific shares for their respective
contributions.

The fundamental bases to determine an employer are namely, the selection and engagement of the employee;
the payment of wages; the power of dismissal and the employers power to control the employees conduct. Private
respondent Reynaldo Mercado had no connection with the selection and engagement of Arturo Villavilla; exercised no
power of dismissal over Arturo Villavilla; neither had he any power of control or had reserved the right to control Arturo
Villavilla as to the result of the work to be done as well as the means and methods by which the same is to be
accomplished, and there was no such uniform salary involved. As such, Arturo could not be made subject of compulsory
coverage under the Social Security Act; hence, private respondents cannot be said to have violated said law which they
did not register him with the Social Security System.

44. G.R. No. 78409 September 14, 1989

NORBERTO SORIANO, petitioner,

vs.

OFFSHORE SHIPPING AND MANNING CORPORATION, KNUT KNUTSEN O.A.S., and NATIONAL
LABOR RELATIONS COMMISSION (Second Division), respondents.

FACTS:

Petitioner Soriano is a licensed Second Marine Engineer hired by Knut Knutson O. A.S. through its authorized
shipping agent in the Philippines, Offshore Shipping &Manning Corporation. According to the Crew Agreement, he was
hired to work as a Third Marine Engineer with a salary of $800 for a period of 15 days.

Petitioner admitted that the contract was extended to 6 months by mutual agreement wherein the employer
allegedly promised petitioner that he will be promoted to Second Marine Engineer. He joined the vessel on July 23, 1985
but repatriated on November 27, 1985 due to alleged failure of employer to fulfill its promise and for unilateral decision
of reduction of his salary from $800 to $500.

Soariano filed a complaint with the POEA for salary differential, overtime pay, unpaid salary and refund, return
of airfare and cash bond on the ground that employer unilaterally altered the agreement causing him to request
repatriation.

POEA OIC denied the other claims and held employer liable for the cash bond of 15,000. The decision is
grounded on the following reasons: total emolument according to the Employment Contract is $800 inclusive of fixed
overtime pay which is proved in the Wage Scale and submitted to the Accreditation Department making petitioner not
entitled to any salary differential; the corrections found in the Employment Contract is in conformity with the Wage Scale
approved by the POEA; withholding of a certain amount due petitioner is justified to answer his repatriation expenses
for repatriation is proved requested by petitioner and; the deposited cash bond is only 15,000.

Both parties appealed to NLRC. NLRC denied both appeals.

ISSUE: Whether there is alteration for petitioner to be entitled to his alleged claims

HELD: None.
 There is no dispute that an alteration of the employment contract without the approval of the Department of Labor
is a serious violation of law.

Specifically, the law provides:

Article 34 paragraph (i) of the Labor Code reads:

Prohibited Practices. It shall be unlawful for any individual, entity, licensee, or holder of authority:

xxxx

(i) To substitute or alter employment contracts approved and verified by the Department of Labor
from the time of actual signing thereof by the parties up to and including the period of expiration
of the same without the approval of the Department of Labor

A careful examination of the records shows that there is in fact no alteration made in the Crew Agreement or in
the Exit Pass. With the supposed alterations, the figures US$560.00 were handwritten above the figures US$800.00 while
the figures US$240.00 were also written above the word "inclusive". As clearly explained by respondent NLRC, the
correction was made only to specify the salary and the overtime pay to which petitioner is entitled under the
contract. It was a mere breakdown of the total amount into US$560.00 as basic wage and US$240.00 as overtime pay.
Otherwise stated, with or without the amendments the total emolument that petitioner would receive under the agreement
as approved by the POEA is US$800.00 monthly with wage differentials or overtime pay included.

It is quite apparent that the whole conflict centers on the failure of respondent company to give the petitioner the
desired promotion which appears to be improbable at the moment because the M/V Knut Provider continues to be laid off
at Limassol for lack of charterers.

The purpose of Article 34, paragraph 1 of the Labor Code is clearly the protection of both parties. In the instant
case, the alleged amendment served to clarify what was agreed upon by the parties and approved by the Department of
Labor. To rule otherwise would go beyond the bounds of reason and justice.

As recently laid down by this Court, the rule that there should be concern, sympathy and solicitude for the rights
and welfare of the working class, is meet and proper. That in controversies between a laborer and his master, doubts
reasonably arising from the evidence or in the interpretation of agreements and writings should be resolved in the former's
favor, is not an unreasonable or unfair rule.20 But to disregard the employer's own rights and interests solely on the basis
of that concern and solicitude for labor is unjust and unacceptable
45. [G.R. No. 71813. July 20, 1987.]

ROSALINA PEREZ ABELLA/HDA. DANAO-RAMONA, Petitioners, v. THE HONORABLE NATIONAL

LABOR RELATIONS COMMISSION, ROMEO QUITCO and RICARDO DIONELE, SR., Respondents.

FACTS:

On June 27, 1960, petitioner leased a farm land in Ponteverde, Negros Occidental known as Hacienda Danao-
Ramona for 10 years renewable at her option for another 10 years. On August 13,1970, she opted to renew the lease.

During the existence of the lease, she employed the herein private respondents. Private respondent Ricardo
Dionele, Sr. has been a regular farm worker since 1949 and he was promoted to Cabo in 1963. On the other hand, private
respondent Romeo Quitco started as a regular employee in 1968 and was promoted to Cabo in November of the same
year.

Upon the expiration of her leasehold rights, petitioner dismissed private respondents and turned over the hacienda
to the owners thereof on October 5, 1981, who continued the management, cultivation and operation of the farm.

The private respondents filed a complaint with the Minister of Labor for overtime pay, illegal dismissal and
reinstatement with backwages.

Labor Arbiter Manuel M. Lucas decided that the dismissal is warranted by the cessation of the business but
granted separation pay (a fraction of 6 months equivalent to 1 year). The latter is based on the ground that the respondent
closed its business operation not by reason of business reverse or losses (Art. 284 of LC). On appeal, NLRC affirmed LA.

Allegations

Respondents: Art. 284 of LC - which provides for the rights of the employees under the circumstances of termination

Petitioner: her lease agreement had already expired, she is not liable for payment of separation pay. Neither could she
reinstate the complainants in the farm as this is a complete cessation or closure of a business operation, a just cause for
employment termination under Article 272 of the Labor Code.

Art. 284 is an impairment of the constitutional prohibition on impairment of Obligations and Contracts. when she
leased Hacienda Danao-Ramona on June 27, 1960, neither she nor the lessor contemplated the creation of the obligation
to pay separation pay to workers at the end of the lease

ISSUE: Whether the Private Respondents are entitled with separation pay

Whether there is impairment of Contract

HELD: YES separation pay, NO impairment

*As to separation pay

"Sec. 15. Articles 285 and 284 of the Labor Code are hereby amended to read as follows:

"x x x

"Art. 284. Closure of establishment and reduction of personnel. xxx in cases of closure or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service whichever is higher.
A fraction of at least six (6) months shall be considered one (1) whole year."

There is no question that Article 284 of the Labor Code as amended by BP 130 is the law applicable in this case.
 Article 272 of the same Code invoked by the petitioner pertains to the just causes of termination. The Labor
Arbiter does not argue the justification of the termination of employment but applied Article 284 as amended, which
provides for the rights of the employees under the circumstances of termination.

*As to impairment

In the case of Anucension v. National Labor Union (80 SCRA 368-369 [1977]) where the Supreme Court ruled:
The prohibition is not to read with literal exactness like a mathematical formula for it prohibits unreasonable
impairment only. In spite of the constitutional prohibition the State continues to possess authority to safeguard the
vital interests of its people. Legislation appropriate to safeguard said interest may modify or abrogate contracts
already in effect

" Legislation impairing the obligation of contracts can be sustained when it is enacted for the promotion
of the general good of the people, and when the means adopted must be legitimate, i.e. within the scope of the
reserved power of the state construed in harmony with the constitutional limitation of that power." (Citing Basa v.
Federacion Obrera de la Industria Tabaquera y Otros Trabajadores de Filipinas [FOITAF] [L-27113], November 19, 1974,
61 SCRA 93, 102-113]).

The purpose of Article 284 as amended is obvious the protection of the workers whose employment is
terminated because of the closure of establishment and reduction of personnel.

Moreover, to come under the constitutional prohibition, the law must effect a change in the rights of the
parties with reference to each other and not with reference to non-parties.

As correctly observed by the Solicitor General, Article 284 as amended refers to employment benefits to farm
hands who were not parties to petitioners lease contract with the owner of Hacienda Danao-Ramona. That contract
cannot have the effect of annulling subsequent legislation designed to protect the interest of the working class.

In any event, it is well-settled that in the implementation and interpretation of the provisions of the Labor
Code and its implementing regulations, the workingmans welfare should be the primordial and paramount
consideration. (Volshel Labor Union v. Bureau of Labor Relations, 137 SCRA 43 [1985]). It is the kind of interpretation
which gives meaning and substance to the liberal and compassionate spirit of the law as provided for in Article 4 of the
New Labor Code which states that `all doubts in the implementation and interpretation of the provisions of this Code
including its implementing rules and regulations shall be resolved in favor of labor." The policy is to extend the
applicability of the decree to a greater number of employees who can avail of the benefits under the law, which is in
consonance with the avowed policy of the State to give maximum aid and protection to labor. (Sarmiento v. Employees
Compensation Commission, 144 SCRA 422 [1986] citing Cristobal v. Employees Compensation Commission, 103 SCRA
329; Acosta v. Employees Compensation Commission, 109 SCRA 209).

46. [G.R. No. 79256. January 20, 1992.]

UNION OF FILIPRO EMPLOYEES (UFE), Petitioner, v. BENIGNO VIVAR, JR., NATIONAL LABOR
RELATIONS COMMISSION and NESTLE PHILIPPINES, INC. (formerly FILIPRO, INC.), Respondents.

FACTS:

Respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National Labor Relations Commission
(NLRC) a petition for declaratory relief seeking a ruling on its rights and obligations respecting claims of its
monthly paid employees for holiday pay in the light of the Courts decision in Chartered Bank Employees
Association v. Ople (138 SCRA 273 [1985]).

Both Filipro and the Union of Filipro Employees (UFE) agreed to submit the case for voluntary arbitration
and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator. On January 2, 1980, Arbitrator Vivar
rendered a decision directing Filipro to: "pay its monthly paid employees holiday pay pursuant to Article 94 of the
Code, subject only to the exclusions and limitations specified in Article 82 and such other legal restrictions as are
provided for in the Code."

Filipro filed a motion for clarification seeking, among others, the deduction from the holiday pay award of
overpayment for overtime, night differential, vacation and sick leave benefits due to the use of 251 divisor.

Petitioner UFE answered that the use of 251 as divisor is an established employee benefit which cannot be
diminished.

On January 14, 1986, the respondent arbitrator issued an order declaring, among others, that with the
grant of 10 days holiday pay, the divisor should be changed from 251 to 261 and ordered the reimbursement of
overpayment for overtime, night differential, vacation and sick leave pay due to the use of 251 days as divisor.

Arbitrator Vivars rationale for his decision is as follows:

". . . The new doctrinal policy established which ordered payment of ten holidays certainly adds to or
accelerates the basis of conversion and computation by ten days. With the inclusion of ten holidays as paid days,
the divisor is no longer 251 but 261 or 262 if election day is counted. This is indeed an extremely difficult legal
question of interpretation which accounts for what is claimed as falling within the concept of solutio indebiti.

When the claim of the Union for payment of ten holidays was granted, there was a consequent need to
abandon that 251 divisor. To maintain it would create an impossible situation where the employees would benefit
with additional ten days with pay but would simultaneously enjoy higher benefits by discarding the same ten days
for purposes of computing overtime and night time services and considering sick and vacation leave credits.
Therefore, reimbursement of such overpayment with the use of 251 as divisor arises concomitant with the award of
ten holidays with pay.

ISSUE: Whether the divisor should be changed to 261 as ruled by the Arbiter

HELD: NO.

The divisor assumes an important role in determining whether or not holiday pay is already included in the
monthly paid employees salary and in the computation of his daily rate.

One strong argument in favor of the petitioners stand is the fact that the Chartered Bank, in computing overtime
compensation for its employees, employs a divisor of 251 days. The 251 working days divisor is the result of subtracting
all Saturdays Sundays and the ten (10) legal holidays from the total number of calendar days in a year. If the employees
are already paid for all non-working days, the divisor should be 365 and not 251.

It must be stressed that the daily rate, assuming there are no intervening salary increases, is a constant
figure for the purpose of computing overtime and night differential pay and commutation of sick and vacation
leave credits. Necessarily, the daily rate should also be the same basis for computing the 10 unpaid holidays.

The respondent arbitrators order to change the divisor from 251 to 261 days would result in a lower daily
rate which is violative of the prohibition on non-diminution of benefits found in Article 100 of the Labor Code.

To maintain the same daily rate if the divisor is adjusted to 261 days, then the dividend, which represents
the employees annual salary, should correspondingly be increased to incorporate the holiday pay.

***To illustrate, if prior to the grant of holiday pay, the employees annual salary is P25,100, then dividing
such figure by 251 days, his daily rate is P100.00. After the payment of 10 days holiday pay, his annual salary
already includes holiday pay and totals P26,100 (P25,100 + 1,000). Dividing this by 261 days, the daily rate is still
P100.00.
 There is thus no merit in respondent Nestles claim of overpayment of overtime and night differential pay
and sick and vacation leave benefits, the computation of which are all based on the daily rate, since the daily rate is
still the same before and after the grant of holiday pay.

Respondent Nestles invocation of solutio indebiti, or payment by mistake, due to its use of 251 days as
divisor must fail in light of the Labor Code mandate that "all doubts in the implementation and interpretation of
this Code, including its implementing rules and regulations, shall be resolved in favor of labor." (Article 4).

Moreover, prior to September 1, 1980, when the company was on a 6-day working schedule, the divisor
used by the company was 303, indicating that the 10 holidays were likewise not paid. When Filipro shifted to a 5-
day working schedule on September 1, 1980, it had the chance to rectify its error, if ever there was one, but did not
do so. It is now too late to allege payment by mistake.

47. [G.R. No. 116542. July 30, 1996.]

THE HONGKONG AND SHANGHAI BANKING CORPORATION, Petitioner, v. NATIONAL LABOR

RELATION COMMISSION and EMMANUEL A. MENESES,Respondents.

FACTS:

Emmanuel Meneses is a hired and ranked employee in petitioner bank. On February 3, 1993, he informed
the bank that he had an upset stomach and will not be able to report for work. His superior however told him to go
to work for their department was undermanned but Emmanuel insisted that he cannot so he was allowed to go on
sick leave.

Later that day, petitioner called to the given number of Emmanuel to acquire information but they were
informed that Emmanuel was not there. The following day, Emmanuel reported to work and was asked to explain
why he was not at home on his supposed sick leave. Emmanuel explained that he has been away from his residence
for over a week and said that he indeed suffered from an upset stomach and even went to Dr. Arthur Logos.
Petitioner Bank called Dr. Logos and was informed that Emmanuel did not go to him and that his last consultation
was a year ago (December 1992). Petitioner Bank asked Emmanuel to submit an explanation.

Emmanuel answered the memorandum and insisted that he indeed had an upset stomach, he also
submitted certification from his uncle and a certain Melvin Lozano about his whereabouts during that day. He said
that what he said about him going to Dr. Logos was only an impulse due to the stress he was receiving from his
marital difficulties.

Petitioner Bank terminated him pursuant to Article 13, Section VI of the Collective Bargaining Agreement
between the union of the rank and file employees of the bank and the company and the banks Code of Conduct.

On appeal, the Labor Arbiter ordered for Emmanuels reinstatement. The Commission ruled that that said
ground to be overly broad, and stated that "(f)or us to agree that any form of dishonesty committed by an
employee of the bank is a ground for dismissal, is to say the least stretching the import of the aforecited rule too
far.

ISSUE: Whether Emmanuels act of giving a false statement constituted to dishonesty that would warrant his
termination

HELD: NO.

Petitioner insists that private respondent should be dismissed in accordance with rules contained in its
employees handbook titled Working Together, Appendix A 5 of which reads as follows:
"Appendix A

Serious Offenses Calling For Termination Any form of dishonesty, like but not limited to the following:

fraud
making false or artificial entries in the books or records of the Bank
failing to turn over money entrusted by a client for the Bank within a specified time
theft of bank property
using company funds/assets for any unofficial purpose.
Any violation of the Banks Code of Conduct which has penal consequences under relevant local laws.
Deliberately inflicting or attempting to inflict bodily injury upon a co-employee on Bank premises, or in case it
is committed elsewhere, for reasons which are work-related.
Sabotage or causing damage to work or equipment of the Bank, or any underhanded interference in Bank
operations.
Any other serious offense analogous to the above."

While the foregoing text makes "any form of dishonesty . . ." a "serious offense calling for termination,"
such general statement must however be understood in the context of the enumeration of offenses, all of which are
directly related to the function of the petitioner as a banking institution.

In the context of the instant case, dismissal is the most severe penalty an employer can impose on an
employee. It goes without saying that care must be taken, and due regard given to an employees circumstances, in
the application of such punishment. Moreover, private respondents acts of dishonesty his first offense in his
seven years of employment did not show deceit nor constitute fraud and did not result in actual prejudice to
petitioner.

To be lawful, the cause for termination must be a serious and grave malfeasance to justify the deprivation
of a means of livelihood. This is merely in keeping with the spirit of our Constitution and laws which lean over
backwards in favor of the working class, and mandate that every doubt must be resolved in their favor.

The employers prerogative and power to discipline and terminate an employees services may not be
exercised in an arbitrary or despotic manner as to erode or render meaningless the constitutional guarantees of
security of tenure and due process. Our labor laws, both substantive and procedural, require strict compliance
before an employee may be dismissed. Clearly, it is the NLRCs right and duty to review employers exercise of
their prerogative to dismiss so as to prevent abuse and arbitrariness. The petition is an unwarranted attack against
workers right to security of tenure. It must be demolished at first sight.
48. [G.R. No. L-73681. June 30, 1988.]

COLGATE PALMOLIVE PHILIPPINES, Inc., Petitioners, v. HON. BLAS F. OPLE, COLGATE PALMOLIVE
SALES UNION, Respondents.

FACTS:

The respondent Union filed a Notice of Strike with the Bureau of Labor Relations (BLR) on ground of
unfair labor practice consisting of alleged refusal to bargain, dismissal of union officers/members; and coercing
employees to retract their membership with the union and restraining non-union members from joining the union.

After efforts at amicable settlement proved unavailing, the Office of the MOLE, upon petition of petitioner
assumed jurisdiction over the dispute pursuant to Article 264 (g) of the Labor Code.

In its position paper, petitioner pointed out that:

-Union is not the certified agent of the Companys salesmen

-Unions status is under question because an overwhelming majority of the salesmen are not in
favor of the strike
-the preventive suspension of the three certain salesmen were carried out pursuant to the inherent
right and prerogative management
-the dismissals were justified by the damages suffered by the company
-The company never coerced or attempted to coerce employees, much less interfered in the exercise
of their right to self-organization; the company never thwarted nor tried to defeat or frustrate the
employees right to form their union in pursuit of their collective interest, as long as that right is
exercised within the limits prescribed by law

The respondent Union on the other hand posited that, its Notice to Strike, alleging that it was duly
registered with the Bureau of Labor Relations and that since the registration of the Union up to the present, more
than 2/3 of the total salesmen employed are already members of the Union, leaving no doubt that the true
sentiment of the salesmen was to form and organize the Colgate-Palmolive Salesmen Union.

The Union further alleged that the company is unreasonably delaying the recognition of the union because
when it was informed of the organization of the union, and when presented with a set of proposals for a collective
bargaining agreement, the company took an adversarial stance by secretly distributing a "survey sheet on union
membership" to newly hired salesmen from the Visayas, Mindanao and Metro Manila areas, purposely avoiding
regular salesmen who are now members of the union.

On August 9, 1985, respondent Minister rendered a decision and found no merit in the Unions Complaint
for unfair labor practice allegedly committed by petitioner as regards the alleged refusal of petitioner to negotiate
with the Union, and the secret distribution of survey sheets allegedly intended to discourage unionism and found
that the three salesmen, Peregrino Sayson, Salvador Reynante & Cornelio Mejia "not without fault" and that "the
company has grounds to dismiss above named salesmen."
At the same time respondent Minister directly certified the respondent Union as the collective bargaining
agent for the sales force in petitioner company and ordered the reinstatement of the three salesmen to the company
on the ground that the employees were first offenders.

ISSUE: Whether Minister abused his discretion in directly certifying respondent Union as the Collective
Bargaining Agent of the salesmen and in reinstating the three salesmen despite finding just cause to their dismissal

HELD: YES TO BOTH

*direct certification of Union (this part may be excludedthis is not an issue under Liberal Interpretation)

The procedure for a representation case is outlined in Arts. 257-260 of the Labor Code, in relation to the
provisions on cancellation of a Union registration under Arts. 239-240 thereof, the main purpose of which is to aid
in ascertaining majority representation. The requirements under the law, specifically Secs. 2, 5, and 6 of Rule V,
Book V of the Rules Implementing the Labor Code are all calculated to ensure that the certified bargaining
representative is the true choice of the employees against all contenders.

The Constitutional mandate that the State shall "assure the rights of the workers to self-organization,
collective bargaining, security of tenure and just and humane conditions of work," should be achieved under a
system of law such as the aforementioned provisions of the pertinent statutes. When an overzealous official by-
passes the law on the pretext of retaining a laudable objective, the intendment or purpose of the law will lose its
meaning as the law itself is disregarded.

When respondent Minister directly certified the Union, he in fact disregarded this procedure and its legal
requirements. There was therefore failure to determine with legal certainty whether the Union indeed enjoyed
majority representation. Respondent Minister merely relied on the self-serving assertion of the respondent Union
that it enjoyed the support of the majority of the salesmen, without subjecting such assertion to the test of
competing claims.

*reinstatement

The order of the respondent Minister to reinstate the employees despite a clear finding of guilt on their part is not
in conformity with law.

Reinstatement is simply incompatible with a finding of guilt. Where the totality of the evidence was sufficient to
warrant the dismissal of the employees the law warrants their dismissal without making any distinction between a first
offender and a habitual delinquent.

Under the law, respondent Minister is duly mandated to equally protect and respect not only the labor or workers
side but also the management and/or employers side. The law, in protecting the rights of the laborer, authorizes
neither oppression nor self-destruction of the employer.

To order the reinstatement of the erring employees namely, Mejia, Sayson and Reynante would in effect
encourage unequal protection of the laws as a managerial employee of petitioner company involved in the same incident
was already dismissed and was not ordered to be reinstated.

As stated by Us in the case of San Miguel Brewery v. National Labor Union, "an employer cannot legally be
compelled to continue with the employment of a person who admittedly was guilty of misfeasance or malfeasance
towards his employer, and whose continuance in the service of the latter is patently inimical to his interest." virtua1aw
library

In the subject order, respondent Minister cited a case implying that "the proximity of the dismissal of the
employees to the assumption order created a doubt as to whether their dismissal was really for just cause or due to their
activities."

This is of no moment for the following reasons:chanrob1es virtual 1aw library

(a) Respondent Minister has still maintained in his assailed order that a just cause existed to justify the dismissal of the
employees.

(b) Respondent Minister has not made any finding substantiated by evidence that the employees were dismissed because
of their union activities.

49. [G.R. No. L-51353. June 27, 1988.]

SHELL PHILIPPINES, INC., Plaintiff-Appellee, v. CENTRAL BANK OF THE PHILIPPINES, Defendant-
Appellant.

FACTS:

On May 1, 1970, Congress approved the Act imposing a stabilization tax on consignments abroad (RA 6125).
Section 1 of the statute, in part, provided as follows:jgc:chanrobles.com.ph

"Section 1. There shall be imposed, assessed and collected a stabilization tax on the gross F.O.B. peso proceeds, based on
the rate of exchange prevailing at the time of receipt of such proceeds

"Any export products the aggregate annual F.O.B. value of which shall exceed five million United States dollars in any
one calendar year during the effectivity of this Act shall likewise be subject to the rates of tax in force during the fiscal
years following its reaching the said aggregate value."

During 1971, appellee Shell, Philippines, Inc. exported seria residues, a by-product of petroleum refining, to an
extent reaching $5 million. On January 7, 1972, the Monetary Board issued its Resolution No. 47 subjecting petroleum
pitch and other petroleum residues to the stabilization tax effective January 1, 1972. Under the Central Bank Circular No.
309, implemented by Resolution No. 47, appellee had to pay the stabilization tax beginning January 1, 1972, which it did
under protest. On September 14, 1972, appellee filed suit against the Central Bank before the Court of First Instance of
Manila, praying that Monetary Board Resolution No. 47 be declared null and void.

The lower court sustained petitioner, and it declared Monetary Board Resolution No. 47 as void and it ordered
refund of the stabilization tax paid by appellee during the period January 1 to June 30, 1972. Central Bank has appealed
from the judgment.

ISSUE: Whether the Monetary Board Resolution No. 47 is void?

HELD: YES.

While it is true that under the same law the Central Bank was given the authority to promulgate rules and
regulations to implement the statutory provision in question, we reiterate the principle that this authority is limited only to
carrying into effect what the law being implemented provides.

Administrative regulations adopted under legislative authority by a particular department must be in harmony
with the provisions of the law, and should be for the sole purpose of carrying into effect its general provisions. By such
regulations, of course, the law itself cannot be extended.

The rule-making power must be confined to details for regulating the mode or proceeding to carry into effect the
law as it has been enacted. The power cannot be extended to amending or expanding the statutory requirements or to
embrace matters not covered by the statute. Rules that subvert the statute cannot be sanctioned.

In case of discrepancy between the basic law and a rule or regulation issued to implement said law, the basic law
prevails because said rule or regulation cannot go beyond the terms and provisions of the basic law

Considering the foregoing, we rule that the trial court was correct in declaring that "Monetary Board Resolution
No. 47 is void insofar as it imposes the tax mentioned in Republic Act No. 6125 on the export seria residue of (plaintiff)
the aggregate annual F.O.B., value of which reached five million United States dollars in 1971 effective on January 1,
1972." The said resolution runs counter to the provisions of R.A. 6125 which provides that" (A)ny export product the
aggregate annual F.O.B. value of which shall exceed five million United States dollars in any one calendar year during the
effectivity of this Act shall likewise be subject to the rates of tax in force during the fiscal year following its reaching the
said aggregate value.
50. INSULAR BANK OF ASIA AND AMERICA EMPLOYEES UNION (IBAAEU) vs. Hon. Inciong

Facts:

On June 20, 1975, petitioner filed a case against respondent bank (INSULAR) for payment of holiday pay before the NLRC.
The Arbiter favored the petitioner and ordered Insular to pay the wages for all regular holidays from Nov 1, 1974. Insular
did not appeal from this decision and instead complied with the order by paying the holiday pay of the employees. Then in
December of the same year, PD No. 850 was promulgated amending the holiday pay provisions of the Labor Code.
Accordingly, on Feb 16, 1976, Dept of Labor promulgated the rules for the implementation of holidays with pay to wit:

Sec. 2. Status of employees paid by the month. Employees who are uniformly paid by the month, irrespective of the
number of working days therein, with a salary of not less than the statutory or established minimum wage (P240/month at
that time) shall be presumed to be paid for all days in the month whether worked or not.

Policy Instruction No. 9 was then issued by the then Sec. of Labor interpreting the above-quoted rule. Basically the P.I.
just echoed what the afore-stated Section provides.

Because of these circumstances, Insular stopped the payment of holiday pay of its employees. Petitioner filed a motion for
execution to enforce the previous decision of the Arbiter. Insular opposed and argued that (a) their refusal to pay is justified
by P.I. No.9 and (b) P.D. 850 already repealed the previous award of the Arbiter. The Arbiter again ruled in favor of the
petitioner on the basis of two grounds: (a) that the judgment is already final and the dispositive portion thereof is res judicata
between the parties and (b) that since the decision had been partially implemented by the respondent bank, appeal from the
said decision is no longer available. NLRC sitting en banc likewise affirmed the decision. However, the Minister of Labor
dismissed the case and the decision of the NLRC was set aside. Hence, this petition.

Issue:

WON Minister Inciong was correct in ruling in favor of respondent bank?

Ruling: NO

Art. 94. Right to holiday pay. (a) Every worker shall be paid his regular daily wage during regular holidays, except in
retail and service establishments regularly employing less than ten (10) workers.

From the above-cited provision, it is clear that monthly paid employees are not excluded from the benefits of holiday pay.
Public respondent maintains that the ten (10) paid legal holidays law, to start with, is intended to benefit principally daily
paid employees. It is elementary in the rules of statutory construction that when the language of the law is clear and
unequivocal the law must be taken to mean exactly what it says. In the case at bar, the provisions of the Labor Code on the
entitlement to the benefits of holiday pay are clear and explicit - it provides for both the coverage of and exclusion from the
benefits. In Policy Instruction No. 9, the then Secretary of Labor went as far as to categorically state that the benefit is
principally intended for daily paid employees, when the law clearly states that every worker shall be paid their regular
holiday pay. Further, contrary to public respondent's allegations, it is patently unjust to deprive the members of petitioner
union of their vested right acquired by virtue of a final judgment on the basis of a labor statute promulgated following the
acquisition of the "right". Thus Article 4 of the Labor Code provides that, "All doubts in the implementation and
interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of
labor
51. VARORIENT SHIPPING vs. Gil A. Flores

Facts:

Private respondent is employed as a seaman for the petitioner with a monthly salary of US$1,200 however, if computed
together with other benefits would amount to a total fixed amount of US$2,100. He was deployed in Bangkok, Thailand.
During his employment, the master of the vessel sent respondent to a Medical Centre in Cameroon due to a shooting pain
in his right foot. Because of this, respondent was repatriated to the Philippines. When he reported back to work, he was
referred to the company physician at Makati Med where he was subjected to a CT scan. The doctor observed that the CT
scan showed large disc herniation and recommended respondents confinement for at least two weeks for P.T. and
medications; if not resolved, he may need surgical decompression. Respondent demanded for sickness wages for his medical
treatment but ended up just being constrained to provide for his own medical expenses. Aggrieved, he filed a complaint
seeking reimbursement for his medical expenses along with other claims. Petitioner countered that respondent is no longer
entitled for any compensation as he already received an amount of US$1,010.00 as settlement for his sickness wages as
evidence by a Receipt and Quitclaim and that the respondent also received cash advances by way of vouchers which
according to them are not yet paid and should therefore be off-set to any claims of the respondent. Respondent denied having
received the said vouchers and avers that his signature therein is a forgery. The Labor Arbiter dismissed the respondents
complaint as well as the petitioners counter claim. Such decision was set aside by the NLRC and ruled in favor of private
respondent. CA affirmed with modifications by increasing the amount of the medical reimbursement in favor of the
respondent. Hence, this case.

Issue:

WON petitioners should be exonerated from any liability by virtue of the quitclaim?

Ruling: NO

The Receipt and Quitclaim executed by respondent lacks the elements of voluntariness and free will and, therefore, does
not absolve petitioners from liability in paying him the sickness wages and other monetary claims. There are other requisites,
to wit: (a) that there was no fraud or deceit on the part of any of the parties; (b) that the consideration of the quitclaim
is credible and reasonable; and (c) that the contract is not contrary to law, public order, public policy, morals or
good customs, or prejudicial to a third person with a right recognized by law. A perusal of the provisions of the Receipt
and Quitclaim shows that respondent would be releasing and discharging petitioners from all claims, demands, causes of
action, and the like in an all-encompassing manner, including the fact that he had not contracted or suffered any illness or
injury in the course of his employment and that he was discharged in good and perfect health. These stipulations clearly
placed respondent in a disadvantageous position vis--vis the petitioners.

52. Periquet vs NLRC

Facts:

The petitioner was dismissed as toll collector by the Construction Development Corporation of the Philippines a private
respondent herein, for willful breach of trust and unauthorized possession of accountable toll tickets allegedly found in her
purse during a surprise inspection. Claiming she had been "framed," she filed a complaint for illegal dismissal and was
sustained by the labor arbiter, who ordered her reinstatement within ten days together with payment of full back wages.
Nine years later, petitioner filed a writ of execution which was sustained by the labor arbiter. However, the NLRC sustained
the appeal of CDCP and set aside the decision of the arbiter. NLRC ruled that such writ is already time-barred having been
filed beyond the five-year period prescribed by both the Rules of Court and the Labor Code. It also rejected the petitioner's
claim that she had not been reinstated on time and ruled as valid the two quitclaims she had signed waiving her right to
reinstatement and acknowledging settlement in full of her back wages and other benefits. Periquet insists it was the private
respondent that delayed and prevented the execution of the judgment in her favor, but that is not the way we see it. The
record shows it was she who dilly-dallied.

Issue:

WON the decision of the NLRC is correct?

Ruling: YES

It is difficult to understand the attitude of the petitioner, who has blown hot and cold, as if she does not know her own mind.
First she signed a waiver and then she rejected it; then she signed another waiver which she also rejected, again on the
ground that she had been deceived. In her first waiver, she acknowledged full settlement of the judgment in her favor, and
then in the second waiver, after accepting additional payment, she again acknowledged fun settlement of the same judgment.
But now she is singing a different tune. In her petition, she is now disowning both acknowledgments and claiming that the
earlier payments both of which she had accepted as sufficient, are insufficient. They were valid before but they are not valid
now. She also claimed she was harassed and cheated by the past management of the CDCP and sought the help of the new
management of the PNCC under its "dynamic leadership." But now she is denouncing the new management-for also tricking
her into signing the second quitclaim.

Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and
represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of a change of
mind. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms
of settlement are unconscionable on its face, that the law will step in to annul the questionable transaction. But where it is
shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the
consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding
undertaking. As in this case.

53. Artemio Labor et al. vs NLRC

Facts:

Petitioners were employees of Gold City at its Eye Ball Disco owned by private respondent Rudy Uy. They filed a complaint
for illegal dismissal and unfair labor standards for underpayment of their salary as wells as other benefits such as 13 th month
pay, NSD, overtime pay, etc. Meanwhile, the respondents side, particularly some of its employees and a customer filed a
criminal action against the petitioners for theft and estafa. According to the affiants, the petitioners would get the claim
stubs from customers of Eye Ball Disco that entitle them to one free drink each, but the petitioners did not surrender these
stubs to the cashier and instead made the customers pay for the drinks; then, later, when other customers ordered drinks, the
petitioners would surrender these stubs to the cashier as "payment" for the drinks of these other customers and pocket their
payment. However, this criminal case did not last long as it was dismissed outright by the Provincial Prosecutor for utter
lack of evidence and for being mere allegations. As for the labor case, petitioners alleged that they were prevented to enter
their work place and that their time cards are no longer in their slots; and that they were advised to resign. They denied
having abandoned their workplace as a matter of fact, some of them were even on approved leave and that no termination
notice whatsoever was issued prior to them being banned. They also denied having signed any quitclaim. Thereafter, the
Labor Arbiter ruled in favor of the petitioners. On appeal, NLRC reversed the decision and ruled in favor of Gold City.

Issue:

WON petitioners money claims are barred by the alleged compromise agreements?

Ruling: NO
Recovery of the petitioners' money claims for the violations of labor standard laws are not barred by the alleged compromise
agreements signed by the petitioners. Gold City has not submitted any compromise agreement attended with the
formulations of law. All that it has are the cash vouchers, dated 17 July 1991, which states under the heading
PARTICULARS: "To payment of Compromise Settlement representing Salary Differentials and Allowances as per
RTWPB-X1-02." Of course, a voucher purporting to represent payment of the consideration in a compromise agreement in
not the compromise agreement, itself. Since Gold City did not submit any compromise agreement, then it is logical to
presume that none existed for it had the burden of proving its own assertions. Even if the petitioners did enter into a
compromise settlement with Gold City, such agreement would be valid and binding only if the agreement was voluntarily
entered into and represents a reasonable settlement of the claims. In this case, the amounts purportedly received by the
petitioners were unreasonably lower than what they were legally entitled to.

54. Jag & Haggar Jeans vs. NLRC

Facts:

Lakas Manggagawa sa Jag (Union) staged a strike against petitioner. Upon the petition filed by the latter, the Labor Arbiter
declared the strike illegal and ordered the dismissal of some union officers and members from employment. The affected
officers appealed before the NLRC which reversed the Arbiters decision. However upon motion, it modified its decision.
Again, the affected officers filed their motion for reconsideration. Pending resolution of the said motion, the two parties
agreed to negotiate for a possible settlement. Eventually, a compromise agreement was reached between the parties which
provides among others that the company would pay the officers and the union members separation pay and the company
further agreed to provide financial assistance. While the others were reinstated in the company. Out of a total of 114 affected
employees, 102 of them availed of the benefits provided for under the Compromise Agreement. Meanwhile, the 12
remaining employees still continued with the case. The NLRC ruled in their favor and ordered that the company accept
them back with full payment of back wages. Petitioners appeal to the CA was also denied. Hence, this petition.

Issue:

Whether or not the Compromise Agreement entered into by petitioner and the Union is binding upon private respondents?

Ruling: NO

The waiver of reinstatement, like waivers of money claims, must be regarded as a personal right which must be exercised
personally by the workers themselves. "For a waiver thereof to be legally effective, the individual consent or ratification of
the workers or employees involved must be shown. Neither the officers nor the majority of the union had any authority to
waive the accrued rights pertaining to the dissenting minority members, .... The members of the union need the protective
shield of this doctrine not only vis-a-vis their employer but also, at times, vis-a-vis the management of their own union, and
at other times even against their own imprudence. We have ruled that ". . . when it comes to individual benefits accruing to
members of a union from a favorable final judgment of any court, the members themselves become the real parties in interest
and it is for them, rather than for the union, to accept or reject individually the fruits of litigation". We also find no reason
for the union members to enter into a compromise when the decision of NLRC ordering their reinstatement is more
advantageous to them than their being dismissed from their jobs under said Compromise Agreement. The Compromise
Agreement does not apply to private respondents who did not sign the Compromise Agreement, nor avail of its benefits.

55. Union Filipino Workers vs. NLRC

Facts:
This case first started with 52 employees in the lumpia department of SIMEX, the respondent corporation. The root of
the facts occurred when the said employees were not given their usual working materials and equipment and instead were
asked to clean their respective areas. Since these workers were employed on a "pakiao" basis, they refused. The following
day when they reported back to work, they were surprised that all their materials and equipment were all removed from
their workplaces. Giving the Union the belief that they were thus effectively locked out. Thereafter, SIMEX filed a Notice
of "Permanent Shutdown/Total Closure of All Units of Operation in the Establishment" with the Department of Labor and
Employment allegedly due to business reverses and losses. Meanwhile in sympathy to their co-workers, 39 other employees
of SIMEX picketed outside the company premises for allegedly committing unfair labor practices to them and to their co-
workers. By reason thereof, SIMEX's supposed offer of separation pay totalling P280,000.00 was withdrawn. When these
workers lifted their picket and voluntarily reported for work, SIMEX refused to give them their usual work. They were
dismissed effectively. Because of this another complaint for Unfair Labor Practice was filed. It is this case that is the subject
of this Petition for Certiorari. The Labor Arbiter decided in favor of the employees and ruled that the closure of SIMEX was
a mere subterfuge in order to discourage the formation of the union. However, the NLRC reversed such decision and ruled
that the determination of the wisdom or expediency to close a department in a corporation is the sole prerogative of the
corporation. Thus, the case was elevated via petition for certiorari. While the case was undergoing, SIMEX filed a
Manifestation stating the they discovered that an Acknowledgement Receipt and Undertaking had already been signed
between the Union and their counsel whereby the employees were allegedly already settled. UFW, objected and claimed
that it never materialized and no agreement was made.

Issue:

WON a compromise had been reached by the parties?

Ruling: NO compromise was reached.

The alleged settlement involved three (3) cases, one of which charges alleged violation of labor standards. Compromise
agreements involving labor standards cases must be reduced to writing and signed in the presence of the Regional
Director or his duly authorized representative. The questioned "Acknowledgment Receipt and Undertaking" did not comply
with this requisite. It was not, therefore, duly executed. Also, no evidence was adduced that would show that the counsel
for UFW was authorized to enter into a compromise. The fact that said counsel undertook to obtain the signatures of the
proper officers of UFW shows that his action was still subject to ratification by the union members. This confirmation was
never secured as shown by the fact that no motion for the dismissal of the case at bar had been filed by UFW or on its behalf
in order to implement the full and final settlement of said case.

56. Veloso vs. DOLE

Facts:

The controversy began when the petitioners, along with several co-employees, filed a complaint against the private
respondent for unfair labor practices, underpayment, and non-payment of overtime, holiday, and other benefits. This was
decided in favor of the complainants. Respondent appealed but to no avail. The latter then filed a motion for reconsideration.
While the motion was pending, petitioner Alfredo Veloso, through his wife, signed a Quitclaim and Release for and in
consideration of P25,000.00, and on the same day his counsel manifested "Satisfaction of Judgment". For his part, petitioner
Liguaton filed a motion to dismiss based on a Release and Quitclaim for and in consideration of the sum of P20,000.00 he
acknowledged to have received from the private respondent. These releases were later on impugned by the petitioners
claiming that they were just forced to sign them out of extreme necessity. The Undersecretary of Labor believe so and
declared that the quitclaims are valid. Petitioners filed the present petition praying for the annulment of the quitclaims and
cited the case of Pampanga Sugar Development Co., Inc. v. Court of Industrial Relations wherein the quitclaims were
declared void.
Issue:

WON the Release and Quitclaim are valid and binding between the parties?

Ruling: YES

The case cited is not apropos because the quitclaims therein invoked were secured by the employer after it had already lost
in the lower court and were subsequently rejected by this Court when the employer invoked it in a petition for certiorari. By
contrast, the quitclaims in the case before us were signed by the petitioners while the motion for reconsideration was still
pending in the DOLE. Furthermore, the quitclaims in the cited case were entered into without leave of the lower court
whereas in the case at bar the quitclaims were made with the knowledge and approval of the DOLE.

"Dire necessity" is not an acceptable ground for annulling the releases, especially since it has not been shown that
the employees had been forced to execute them. It has not even been proven that the considerations for the quitclaims
were unconscionably low and that the petitioners had been tricked into accepting them. The fact that the petitioners accepted
the lower amounts would suggest that the original award was exorbitant and they were apprehensive that it would be adjusted
and reduced.

57 . SMART COMMUNICATIONS, INC., vs. REGINA M. ASTORGA

G.R. No. 148132 January 28, 2008

FACTS:

In February 1998, SMART launched an organizational realignment to achieve more efficient operations. Thus,
SMART entered into a joint venture agreement with NTT of Japan, and formed SMART-NTT Multimedia,
Incorporated (SNMI). Since SNMI was formed to do the sales and marketing work, SMART abolished the
CSMG/FSD, Regina Astorgas ( herein respondent ) division.

To soften the blow of the realignment, SNMI agreed to absorb the CSMG personnel who would be recommended
by SMART. SMART then conducted a performance evaluation of CSMG personnel. Upon evaluation, Astorga
landed last in the performance evaluation, thus, she was not recommended by SMART. SMART, nonetheless,
offered her a supervisory position in the Customer Care Department, but she refused the offer because the position
carried lower salary rank and rate.

Consequently, on March 3, 1998 SMART issued a memorandum advising Astorga of the termination of her
employment on ground of redundancy. The termination of her employment prompted Astorga to file a Complaint
against SMART She claimed that abolishing CSMG and, consequently, terminating her employment was illegal for
it violated her right to security of tenure. She also posited that it was illegal for an employer, like SMART, to
contract out services which will displace the employees, especially if the contractor is an in-house agency.

SMART responded that there was valid termination. It argued that Astorga was dismissed by reason of redundancy,
which is an authorized cause for termination of employment, and the dismissal was effected in accordance with the
requirements of the Labor Code.

The Labor Arbiter rendered a Decision, declaring Astorgas dismissal from employment illegal. However, upon
appeal by SMART, the NLRC reversed the decision of the Labor Arbiter and sustained Astorgas dismissal.

Astorga then went to the CA, where it rendered a decision affirming the resolutions of the NLRC. However, the CA
found that SMART failed to comply with the mandatory one-month notice prior to the intended termination.

ISSUE:
 Whether or not the dismissal of respondent Astorga is valid ?

HELD:

Yes, the dismissal of respondent Astorga is valid.

Astorga was terminated due to redundancy, which is one of the authorized causes for the dismissal of an employee.
The characterization of an employees services as superfluous or no longer necessary and, therefore, properly
terminable, is an exercise of business judgment on the part of the employer. The wisdom and soundness of such
characterization or decision is not subject to discretionary review provided, of course, that a violation of law or
arbitrary or malicious action is not shown

This Court finds it extremely difficult to believe that SMART would enter into a joint venture agreement with NTT,
form SNMI and abolish CSMG/FSD simply for the sole purpose of easing out a particular employee, such as
Astorga. Moreover, Astorga never denied that SMART offered her a supervisory position in the Customer Care
Department, but she refused the offer because the position carried a lower salary rank and rate. If indeed SMART
simply wanted to get rid of her, it would not have offered her a position in any department in the enterprise.

We agree with the CA that the organizational realignment introduced by SMART, which culminated in the abolition
of CSMG/FSD and termination of Astorgas employment was an honest effort to make SMARTs sales and
marketing departments more efficient and competitive.

Therefore, the dismissal of Astorga is valid.

58. GRANDTEQ INDUSTRIAL STEEL PRODUCTS, INC. and GONZALES, vs. EDNA MARGALLO,
G.R. No. 181393 July 28, 2009

FACTS:

Respondent Margallo is an employee of Grandteq, a domestic corporation engaged in the business of selling welding
electrodes, alloy steels, aluminum and copper alloys. Margallo claimed that on an unstated date, she availed herself
of the car loan program offered to her by Grandteq as a reward for being "Salesman of the Year." She paid the down
payment on a brand new Toyota Corolla,8amounting to 201,000.00, out of her own pocket.

On 29 December 2003, Margallo received a letter regarding an alleged violation on the rules and regulations of the
company. But on January 2004, De Leon (Grandteq VP ) asked Margallo to just resign, promising that if she did,
she would still be paid her commissions and other benefits, as well as be reimbursed her car loan payments. Relying
on De Leons promise, Margallo tendered on 13 January 2004, her irrevocable resignation, effective immediately.
However this promises remain unheeded.

Grandteq and Gonzales opposed Margallos claims. They maintained that Margallo was not entitled to sales
commissions payments and further insisted that she had no right to the refund of her car loan payments under the
car loan agreement she executed with Grandteq.

The Labor Arbiter rendered a decision dismissing all of Margallos claims. Upon appeal, the NLRC effectively
reversed the Labor Arbiters decision by granting Margallo her claims for sales commission, reimbursement of her
car loan payments.

ISSUE:

Whether or not the car loan agreement between Petitioner Company and respondent is null and void
HELD:

Yes, the car loan agreement between Petitioner Company and respondent is null and void.

The questionable provision in the car loan agreement between Grandteq and Margallo provides: "In case of
resignation, of the personnel from the company, all payments made by the personnel shall be forfeited in favor of
the company. Said provisions plainly are contrary to the fundamental principles of justice and fairness. It must be
remembered that Margallo herself paid for the down payment and her share in the monthly amortization of the car.
However, she did not get to leave with the car when she resigned from Grandteq. In effect, Margallo parted with
her hard-earned money for nothing, being left, as she is, with an empty bag. The inequitableness in the conduct of
Grandteq and Gonzales is heightened by the fact that after they regained possession of the car, they resold the same
to another employee under a similar contract bearing the same terms and conditions signed by Margallo.

The Court rigorously disapproves contracts that demonstrate a clear attempt to exploit the employee and deprive
him of the protection sanctioned by both the Constitution and the Labor Code.
The Constitution and the Labor Code mandate the protection of labor. Hence, as a matter of judicial policy, this
Court has, in a number of instances, leaned backwards to protect labor and the working class against the
machinations and incursions of their more financially entrenched employers.35
Although not strictly a labor contract, the car loan agreement herein involves a benefit extended by the employers,
Grandteq and Gonzales, to their employee, Margallo. It should benefit, and not unduly burden, Margallo. The Court
cannot, in any way, uphold a car loan agreement that threatens the employee with the forfeiture of all the car loan
payments he/she had previously made, plus loss of the possession of the car, should the employee wish to resign;
otherwise, said agreement can then be used by the employer as an instrument to either hold said employee hostage
to the job or punish him/her for resigning.

59. ROLANDO E. ESCARIO, vs. NATIONAL LABOR RELATIONS COMMISSION

G.R. No. 124055 June 8, 2000

FACTS:

Private respondent California Marketing Co. Inc. (CMC) is a domestic corporation while respondent Donna Louise
Advertising and Marketing Associates, Inc. (D.L. Admark) is a duly registered promotional firm. Petitioners worked
as merchandisers for the products of CMC. Their services were terminated on 16 March 1992.

On 7 February 1992, petitioners filed a case against CMC before the Labor Arbiter for the regularization of their
employment status. During the pendency of the case before the Labor Arbiter, D.L. Admark sent to petitioners
notice of termination of their employment effective 16 March 1992. CMC, on the other hand, denied the existence
of an employer-employee relationship between petitioner and itself. Rather, CMC contended that it is D.L. Admark
who is the employer of the petitioners. It insisted that It, it hired independent job contractors such as D.L. Admark,
to provide the necessary promotional activities for its product lines. For its part, D.L. Admark asserted that it is the
employer of the petitioners.

On 29 July 1994, the Labor Arbiter rendered a decision finding that petitioners are the employees of CMC as they
were engaged in activities that are necessary and desirable in the usual business or trade of CMC. On appeal, the
NLRC set aside the decision of the Labor Arbiter. It ruled that no employer-employee relationship existed between
the petitioners and CMC. It, likewise, held that D.L. Admark is a legitimate independent contractor, hence, the
employer of the petitioners.

ISSUE:

Whether or not petitioners are employees of CMC

HELD:

No, petitioners are not employees of CMC

 By applying the four-fold test used in determining employer-employee relationship, the status of D.L. Admark as
the true employer of petitioners is further established and not of CMC. The elements of this test are (1) the selection
and engagement of employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control
the employees conduct.14

As regards the first element, petitioners themselves admitted that they were selected and hired by D.L. Admark. As
to the second element, the NLRC noted that D.L. Admark was able to present in evidence the payroll of petitioners
etc. Neither did the petitioners prove the existence of the third element. Again petitioners admitted that it was D.L.
Admark who terminated their employment.

To prove the fourth and most important element of control, petitioners presented the memoranda of CMCs sales
and promotions manager. The Labor Arbiter found that these memos "indubitably show that the complainants
were under the supervision and control of the CMC people. However, as correctly pointed out by the NLRC, a
careful scrutiny of the documents adverted to, will reveal that nothing therein would remotely suggest that CMC
was supervising and controlling the work of the petitioners.

60 .SANDIGAN SAVINGS and LOAN BANK, INC., and SANDIGAN REALTY DEVELOPMENT
CORPORATION vs. NATIONAL LABOR RELATIONS COMMISSION and ANITA M. JAVIER
G.R. No. 112877 February 26, 1996

FACTS:

Private respondent Anita M. Javier worked as a realty sales agent of the petitioner Sandigan Realty Development
Corporation. Their agreement was that Javier would receive a 5% commission for every sale, or if no sale was
made, she would receive a monthly allowance of P500,00. Subsequently on December 1986, Javier was hired as a
marketing collector of petitioner Sandigan Savings and Loan Bank by Angel Andan. On 20 April 1990, Javier was
advised by Andan not to report for work anymore. This in effect was a notice of dismissal.

On 18 May 1990, Javier filed a complaint against petitioners and Angel Andan with the NLRC for illegal dismissal
and consequently rendered decision in her favor. The decision directed to reinstate her to her former position and
pay her full backwages from the time of her dismissal. On appeal, the NLRC affirmed the decision of the Labor
Arbiter

ISSUE:

Whether or not the employer-employee relationship exist between private respondent and petitioner
Sandigan Realty

HELD:

In determining the existence of an employer-employee relationship, the following elements are generally
considered: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal;
and (4) the employer's power to control the employee with respect to the means and methods by which the work is
to be accomplished.

This Court has generally relied on the so called "right of control test" in making such a determination. Where the
person for whom the services are performed reserves a right to control not only the end to be achieved but also the
means by which such end is reached,the relationship is deemed to exist. Stated differently, it is the power of control
which is the most determinative factor. It is deemed to be such an important factor that the other requisites may
even be disregarded.

Viewed in the light of the foregoing criteria, the features of the relationship between Javier and the Sandigan Realty,
as may be gleaned from the facts described herein below by the Office of the Solicitor General, readily negate the
existence of an employer-employee relationship between them, the element of control being noticeably absent.
 As it appears that Sandigan Realty had no control over the conduct of Javier as a realty sales agent since its only
concern or interest was in the result of her work and not in how it was achieved, there cannot now be any doubt that
Javier was not an employee, much less a regular employee of the Sandigan Realty. Hence, she cannot be entitled to
the right to security of tenure nor to backwages and separation pay as a consequence of her separation therefrom.

61. ELIAS VILLUGA et. al vs. NATIONAL LABOR RELATIONS COMMISSION and BROAD STREET
TAILORING and/or RODOLFO ZAPANTA
G.R. No. L-75038 August 23, 1993

FACTS:

Petitioner Elias Villuga was employed as cutter while the other petitioners were either ironers, repairmen and
sewers in the tailoring shop owned by private respondent Rodolfo Zapanta.

However from February 17 to 22, 1978, petitioner Villuga failed to report for work allegedly due to illness. For not
properly notifying his employer, he was considered to have abandoned his work. Consequently, he filed a complaint
with the Regional Office of the Department of Labor, claiming that he was refused admittance when he reported
for work after his absence, allegedly due to his active participation in the union organized by private respondent's
tailors. He further claimed that he was not paid overtime pay, holiday pay, premium pay for work done on rest days
and holidays, service incentive leave pay and 13th month pay.

The Labor Arbiter rendered a decision ordering the dismissal of the complaint for unfair labor practices, illegal
dismissal and other money claims and subsequently affirmed by the NLRC.

ISSUE:

Whether or not employer-employee relationship exist in the case at bar?

HELD:

Yes, employer-employee relationship exist in the case at bar

For an employer-employee relationship to exist, the following elements are generally considered: "(1) the selection
and engagement of the employee; (2) the payment of wages; (3) the power of dismissal and (4) the power to control
the employee's conduct.

In determining whether the relationship is that of employer and employee or one of an independent contractor, "each
case must be determined on its own facts and all the features of the relationship are to be considered." 15Considering
that petitioners who are either sewers, repairmen or ironer, have been in the employ of private respondent as early
as 1972 or at the latest in 1976, faithfully rendering services which are desirable or necessary for the business of
private respondent, and observing management's approved standards set for their respective lines of work as well
as the customers' specifications, petitioners should be considered employees, not independent contractors.

62. BIENVENIDO D. GOMA vs. PAMPLONA PLANTATION INCORPORATED,

G.R. No. 160905 July 4, 2008

FACTS:

Petitioner claimed that he worked as a carpenter at the Hacienda Pamplona since 1995. He claimed that he is a
regular employee and have been illegally dismissed when the respondent refused without just cause to give him
work assignment. Thus, he filed a complaint for illegal dismissal, underpayment of wages and damages against
respondent.
 On the other hand, respondent denied having hired the petitioner as its regular employee. It instead argued that
petitioner was hired by a certain AntoyCaaveral, the manager of the hacienda at the time it was owned by Mr.
Bower and leased by Manuel Gonzales, a jai-alai pelotari known as "Ybarra. Respondent added that it was not
obliged to absorb the employees of the former owner. In 1995, Pamplona Plantation Leisure Corporation (PPLC)
was created for the operation of tourist resorts, hotels and bars. Petitioner, thus, rendered service in the
construction of the facilities of PPLC. If at all, petitioner was a project but not a regular employee

Labor Arbiter dismissed the case for lack of merit. On appeal to the (NLRC), the petitioner obtained favorable
judgment when the tribunal reversed and set aside the Labor Arbiters decision. The NLRC upheld the existence
of an employer-employee relationship.

Contrary to the NLRCs finding, the CA concluded that there was no employer-employee relationship. The CA
stressed that petitioner having raised a positive averment, had the burden of proving the existence of an employer-
employee relationship Lastly, although the petitioner was an employee of the former owner of the hacienda, the
respondent was not required to absorb such employees because employment contracts are in personam and
binding only between the parties.
.
ISSUE:

Whether or not the petitioner is a regular employee of the respondent

HELD:

Yes, the petitioner is a regular employee of the respondent

A thorough examination of the records compels this Court to reach a conclusion different from that of the CA. It
is true that petitioner admitted having been employed by the former owner prior to 1993 or before the respondent
took over the ownership and management of the plantation, however, he likewise alleged having been hired by the
respondent as a carpenter in 1995 and having worked as such for two years until 1997. Notably, at the outset,
respondent categorically denied that it hired the petitioner.

Parenthetically, this Court had pierced the veil of corporate fiction and declared that the two corporations PPLC
and the herein respondent, are one and the same. By setting forth these defenses, respondent, in effect, admitted
that petitioner worked for it, albeit in a different capacity. Such an allegation is in the nature of a negative
pregnant, a denial pregnant with the admission of the substantial facts in the pleadings responded to which are not
squarely denied, and amounts to an acknowledgment that petitioner was indeed employed by respondent.

The employment relationship having been established, the next question we must answer is: Is the petitioner a
regular or project employee?

The principal test used to determine whether employees are project employees as distinguished from regular
employees, is whether or not the employees were assigned to carry out a specific project or undertaking, the
duration or scope of which was specified at the time the employees were engaged for that project.31 In this case,
apart from respondents bare allegation that petitioner was a project employee, it had not shown that petitioner
was informed that he would be assigned to a specific project or undertaking. Neither was it established that he
was informed of the duration and scope of such project or undertaking at the time of his engagement.

Most important of all, based on the records, respondent did not report the termination of petitioners supposed
project employment to the Department of Labor and Employment (DOLE). Department Order No. 19 (as well as
the old Policy Instructions No. 20) requires employers to submit a report of an employees termination to the
nearest public employment office every time the employment is terminated due to a completion of a project.
Respondents failure to file termination reports, particularly on the cessation of petitioners employment, was an
indication that the petitioner was not a project but a regular employee.

63. LOLITA LOPEZ, vs. BODEGA CITY (Video-Disco Kitchen of the Philippines) and/or ANDRES C. TORRES-
YAP
FACTS:

Petitioner was the "lady keeper" tasked with manning its ladies' comfort room of Bodega City ( herein respondent),
a corporation registered in the Philippines. In a letter signed by Yap dated February 10, 1995, petitioner was made
to explain why the concessionaire agreement between her and respondents should not be terminated or suspended
in view of an incident that happened on February 3, 1995, wherein petitioner was seen to have acted in a hostile
manner against a lady customer of Bodega City who informed the management that she saw petitioner sleeping
while on duty. In a subsequent letter respondents had decided to terminate the concessionaire agreement between
them.

On March 1, 1995, petitioner filed a complaint with the NLRC for illegal dismissal against respondents contending
that she was dismissed from her employment without cause and due process. In their answer, respondents contended
that no employer-employee relationship ever existed between them and petitioner; that the latter's services rendered
within the premises of Bodega City was by virtue of a concessionaire agreement she entered into with respondents.

On December 28, 1999, the Labor Arbiter rendered judgment finding that petitioner was an employee of
respondents and that the latter illegally dismissed her. Respondents filed an appeal with the NLRC and again
reverse the decision in favor of the respondent on the basis of lack of merit.

ISSUE:

Whether or not employer-employee relationship exists between the petitioner and respondent?

HELD:

No, employer-employee relationship does not exists between the petitioner and respondent

The issue of whether or not an employer-employee relationship exists in a given case is essentially a question of
fact.

The Court applies the four-fold test expounded in Abante v. Lamadrid Bearing and Parts Corp.,to wit:
To ascertain the existence of an employer-employee relationship, jurisprudence has invariably applied the four-
fold test, namely: (1) the manner of selection and engagement; (2) the payment of wages; (3) the presence or
absence of the power of dismissal; and (4) the presence or absence of the power of control. Of these four, the last
one is the most important. The so-called "control test" is commonly regarded as the most crucial and
determinative indicator of the presence or absence of an employer-employee relationship. Under the control test,
an employer-employee relationship exists where the person for whom the services areperformed reserves the right
to control not only the end achieved, but also the manner and means to be used in reaching that end.

To prove the element of payment of wages, petitioner presented a petty cash voucher showing that she received an
allowance for five (5) days.The CA did not err when it held that a solitary petty cash voucher did not prove that
petitioner had been receiving salary from respondents or that she had been respondents' employee for 10 years.

Anent the element of control, petitioner's contention that she was an employee of respondents because she was
subject to their control does not hold water. Petitioner failed to cite a single instance to prove that she was subject
to the control of respondents insofar as the manner in which she should perform her job as a "lady keeper" was
concerned.

The Court is not persuaded by petitioner's contention that the Labor Arbiter was correct in concluding that there
existed an employer-employee relationship between respondents and petitioner. A perusal of the Decision of the
Labor Arbiter shows that his only basis for arriving at such a conclusion are the bare assertions of petitioner and the
fact that the latter did not sign the letter of Yap containing the proposed concessionaire agreement. However, as
earlier discussed, this Court finds no error in the findings of the NLRC and the CA that petitioner is deemed as
 having given her consent to the said proposal when she continuously performed the tasks indicated therein for a
considerable length of time. For all intents and purposes, the concessionaire agreement had been perfected.

Lastly, the Court finds that the elements of selection and engagement as well as the power of dismissal are not
present in the instant case.

It has been established that there has been no employer-employee relationship between respondents and petitioner.
Their contractual relationship was governed by the concessionaire agreement embodied in the 1992 letter. Thus,
petitioner was not dismissed by respondents. Instead, as shown by the letter of Yap to her dated February 15,
1995,37 their contractual relationship was terminated by reason of respondents' termination of the subject
concessionaire agreement, which was in accordance with the provisions of the agreement in case of violation of its
terms and conditions.

64. VICTORY LINER V. PABLO RACE

FACTS:

Pablo M. Race was employed by Victory Liner, Inc. as a bus driver for the Alaiminos, Pangasinan Cubao, Quezon
City evening route. On 24 August 1994,Races bus figured in an accident, wherein Race suffered a fractured leg, for which
he was confined in the hospital until 10 October 1994. On 10 November 1994, Race was confined again for further treatment
for another month. Victory Liner shouldered all of Races medical expenses for both instances. On January 1998, Race
reported for work, but was informed that he was considered resigned, and was offered consideration of P50,000.00, which
he rejected. Before Christmas 1998, Victory Liner reiterated that he was regarded as resigned, this time, offering him
P100,000.00, which he again rejected. On 30 June 1999, Race sent a letter to Victory Liner demanding employment-related
money claims; no response from Victory Liner.
On 1 September 1999, Race filed a complaint before the Labor Arbiter for:
o Unfair labor practice;
o Illegal dismissal;
o Underpayment of wages;
o Nonpayment of overtime and holiday premium, service incentive leave pay, vacation and sick leave
benefits, 13th month pay;
o Excessive deduction of withholding tax and SSS premium; and
o Moral and exemplary damages and attorneys fees.
LABOR ARBITER: Dismissed; stating that the prescriptive period for filing a case for illegal dismissal had
elapsedconsidered dismissed on 24 November 1994.
NLRC: Reversed Labor Arbiter; cause of action accrued in January 1998, when Race reported for work but was
rejected; Also stated that Victory Liner failed to accord Race due process in terminating his employment.

ISSUES:

[1] WoN the cause of action for illegal dismissal had prescribed.NO. Cause of action accrued January 1998.

[2] WoN Race was illegally dismissed, thus entitled to reinstatement with full back wages and other benefits.YES.
But separation pay in lieu of reinstatement.

HELD:

[1] Prescription

Victory Liner insists that Race already abandoned his work and ceased to be its employee since November 1994.
o Among other arguments, under the 4-fold test of employer-employee relationship: Victory claimed that it
no longer paid Race wages nor exercised control over him since November 1994.
o If reckoning period is counted from when the written demand was made by Race, the 4-year prescriptive
period would be indeterminate, contrary to the spirit of the law.
In illegal dismissal cases, the employee concerned is given a period of four years from the time of his dismissal
 within which to institute a complaint.
o Art. 1146 [CC] Actions based upon an injury to the rights of the plaintiff must be brought within
four years.
o Employment is a property rightwithin the protection of a constitutional guarantee of dues process of
law.
o Therefore, when one is arbitrarily and unjustly deprived of his job or means of livelihood, the action
instituted to contest the legality of ones dismissal from employment constitutes, an action predicated "upon
an injury to the rights of the plaintiff."
The four-year prescriptive period shall commence to run only upon the accrual of a cause of action of the
workerthe time the employment of the worker was unjustly terminated.
Race was not unjustly terminated on 10 November 1994
o At that time, still confined for further treatment of his fractured left leg.
o He must be considered as merely on sick leave
Neither could be deemed as illegally dismissed from work upon his release in December 1994 up to December
1997.
o Race still reported for work to the petitioner and was granted sick and disability leave by Victory Liner for
that period.
Race must be considered as unjustly terminated in January 1998 since this was the first time he was informed by
the Victory Liner that he was deemed resigned from his work.
Consequently, Races filing of complaint for illegal dismissal on 1 September 1999 was well within the four-year
prescriptive period.
It must also be noted that from 10 November 1994 up to December 1997, Victory Liner never formally informed
the respondent of the fact of his dismissal
Moveover, Race did not abandon his work for lack of the 2 factors that constitute abandonment:
o Failure to report for work or absence without valid or justifiable reason; and
o A clear intention to sever employer-employee relationship.
Similarly, the employer-employee relationship between the petitioner and respondent cannot be deemed to have
been extinguished on 10 November 1994,.
o Race reported for work to the petitioner after his release from the hospital in December 1994.
o He was also granted a 120-day sick leave and disability leave
o And also availed himself of the services of the Victory Liners physician on two occasions after his release
o Victory Liner failed to establish the fact that Race ceased to be its employee on 10 November 1994, except
for its flimsy reason that the sick leave, disability leave and physician consultations were given to the
respondent as mere accommodations for a former employee.

[2.a.] Illegal dismissal

The Labor Code mandates that before an employer may legally dismiss an employee from the service, the
requirement of substantial and procedural due process must be complied with.
Substantial due processthe grounds for termination of employment must be based on just or authorized causes.
o Although abandonment of work is within the scope of the just causes for termination (under gross and
habitual neglect by the emlployee of his duties), the court found that there was not abandonment on the part
of Race.
The records also failed to show that the said charges were proven and that respondent was duly informed and heard
with regard to the accusations.
And as Victory Liner is the employer, it is its burdened to prove just cause for terminating the employment of
respondent with clear and convincing evidence, and that Victory Liner failed to discharge this burden, we hold that
respondent was dismissed without just cause by the petitioner.

[2.b.] Reinstatement

Race was willing to be hired as a dispatcher or conductor, and was no longer requesting to be reinstated as a
driver since he cannot drive anymore due to his leg injury.
Even assuming that Race was willing, reinstatement would still be unwarranted.
 o Since Victory Liner is a common carrier, and is obliged to exercise extra-ordinary diligence in transporting
its passengers, it would be a violation of this diligence to reinstate an incapacitated driver.
o An employer may not be compelled to continue to employ such persons whose continuance in the
service will patently be inimical to his interests.
Therefore, in lieu of reinstatement, payment to respondent of separation pay equivalent to one month pay for every
year of service.

65. ABS-CBN BROADCASTING CORP. VS. NAZARENO

FACTS: Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is engaged in the broadcasting business and owns a
network of television and radio stations, whose operations revolve around the broadcast, transmission, and relay of
telecommunication signals. It sells and deals in or otherwise utilizes the airtime it generates from its radio and television
operations. It has a franchise as a broadcasting company, and was likewise issued a license and authority to operate by the
National Telecommunications Commission.

Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production assistants (PAs) on
different dates. They were assigned at the news and public affairs, for various radio programs in the Cebu Broadcasting
Station. On December 19, 1996, petitioner and the ABS-CBN Rank-and-File Employees executed a Collective Bargaining
Agreement (CBA) to be effective during the period from December 11, 1996 to December 11, 1999. However, since
petitioner refused to recognize PAs as part of the bargaining unit, respondents were not included to the CBA.

On October 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status, Underpayment
of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13th Month Pay with Damages
against the petitioner before the NLRC. The Labor Arbiter rendered judgment in favor of the respondents, and declared that
they were regular employees of petitioner as such, they were awarded monetary benefits. NLRC affirmed the decision of
the Labor Arbiter. Petitioner filed a motion for reconsideration but CA dismissed it.

ISSUE: Whether or not the respondents were considered regular employees of ABS-CBN.

HELD: The respondents are regular employees of ABS-CBN. It was held that where a person has rendered at least one year
of service, regardless of the nature of the activity performed, or where the work is continuous or intermittent, the
employment is considered regular as long as the activity exists, the reason being that a customary appointment is not
indispensable before one may be formally declared as having attained regular status.

In Universal Robina Corporation v. Catapang, the Court states that the primary standard, therefore, of determining
regular employment is the reasonable connection between the particular activity performed by the employee in relation to
the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual
business or trade of the employer. The connection can be determined by considering the nature of work performed and its
relation to the scheme of the particular business or trade in its entirety. Also, if the employee has been performing the job
for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing
need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence,
the employment is considered regular, but only with respect to such activity and while such activity exists.

Additionally, respondents cannot be considered as project or program employees because no evidence was
presented to show that the duration and scope of the project were determined or specified at the time of their engagement.
In the case at bar, however, the employer-employee relationship between petitioner and respondents has been proven. In the
selection and engagement of respondents, no peculiar or unique skill, talent or celebrity status was required from them
because they were merely hired through petitioners personnel department just like any ordinary employee. Respondents
did not have the power to bargain for huge talent fees, a circumstance negating independent contractual relationship.
Respondents are highly dependent on the petitioner for continued work. The degree of control and supervision exercised by
petitioner over respondents through its supervisors negates the allegation that respondents are independent contractors.

The presumption is that when the work done is an integral part of the regular business of the employer and when
the worker, relative to the employer, does not furnish an independent business or professional service, such work is a regular
employment of such employee and not an independent contractor. As regular employees, respondents are entitled to the
benefits granted to all other regular employees of petitioner under the CBA . Besides, only talent-artists were excluded from
the CBA and not production assistants who are regular employees of the respondents. Moreover, under Article 1702 of the
New Civil Code: In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and
decent living of the laborer.

66. ANGELINA FRANCISCO VS. NLRC

FACTS:

Year 1995, Petitioner was hired by Kasei Corporation during its incorporation stage. She was designated as
Accountant and Corporate Secretary and was assigned to handle all the accounting needs of the company. She was also
designated as Liaison Officer to the City of Makati to secure business permits, construction permits and other licenses for
the initial operation of the company.

Although she was designated as Corporate Secretary, she was not entrusted with the corporate documents; neither
did she attend any board meeting nor required to do so. She never prepared any legal document and never represented the
company as its Corporate Secretary. 1996, petitioner was designated Acting Manager. Petitioner was assigned to handle
recruitment of all employees and perform management administration functions; represent the company in all dealings with
government agencies, especially with the BIR, SSS and in the city government of Makati; and to administer all other matters
pertaining to the operation of Kasei Restaurant which is owned and operated by Kasei Corporation.

January 2001, petitioner was replaced by a certain Liza R. Fuentes as Manager. Kasei Corporation reduced her
salary, she was not paid her mid-year bonus allegedly because the company was not earning well. On October 2001,
petitioner did not receive her salary from the company. She made repeated follow-ups with the company cashier but she
was advised that the company was not earning well. Eventually she was informed that she is no longer connected with the
company.

Since she was no longer paid her salary, petitioner did not report for work and filed an action for constructive
dismissal before the labor arbiter. Private respondents averred that petitioner is not an employee of Kasei Corporation. They
alleged that petitioner was hired in 1995 as one of its technical consultants on accounting matters and act concurrently as
Corporate Secretary. As technical consultant, petitioner performed her work at her own discretion without control and
supervision of Kasei Corporation. Petitioner had no daily time record and she came to the office any time she wanted and
that her services were only temporary in nature and dependent on the needs of the corporation.

The Labor Arbiter found that petitioner was illegally dismissed, NLRC affirmed with modification the Decision of
the Labor Arbiter. On appeal, CA reversed the NLRC decision. CA denied petitioners MR, hence, the present recourse.

ISSUES: Whether or not there was an employer-employee relationship between petitioner and private respondent; and if in
the affirmative,

Whether or not petitioner was illegally dismissed.

HELD:
 Generally, courts have relied on the so-called right of control test where the person for whom the services are
performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end. In
addition to the standard of right-of-control, the existing economic conditions prevailing between the parties, like the
inclusion of the employee in the payrolls, can help in determining the existence of an employer-employee relationship.

There are instances when, aside from the employers power to control the employee, economic realities of the
employment relations help provide a comprehensive analysis of the true classification of the individual, whether as
employee, independent contractor, corporate officer or some other capacity.

It is better, therefore, to adopt a two-tiered test involving: (1) the employers power to control; and (2) the economic
realities of the activity or relationship.

The control test means that there is an employer-employee relationship when the person for whom the services are
performed reserves the right to control not only the end achieved but also the manner and means used to achieve that end.

There has to be analysis of the totality of economic circumstances of the worker. Thus, the determination of the
relationship between employer and employee depends upon the circumstances of the whole economic activity, such as: (1)
the extent to which the services performed are an integral part of the employers business; (2) the extent of the workers
investment in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the workers
opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight required for the success of the
claimed independent enterprise; (6) the permanency and duration of the relationship between the worker and the employer;
and (7) the degree of dependency of the worker upon the employer for his continued employment in that line of business.
The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his continued
employment in that line of business

By applying the control test, it can be said that petitioner is an employee of Kasei Corporation because she was
under the direct control and supervision of Seiji Kamura, the corporations Technical Consultant. She reported for work
regularly and served in various capacities as Accountant, Liaison Officer, Technical Consultant, Acting Manager and
Corporate Secretary, with substantially the same job functions, that is, rendering accounting and tax services to the company
and performing functions necessary and desirable for the proper operation of the corporation such as securing business
permits and other licenses over an indefinite period of engagement. Respondent corporation had the power to control
petitioner with the means and methods by which the work is to be accomplished.

Under the economic reality test, the petitioner can also be said to be an employee of respondent corporation because
she had served the company for 6 yrs. before her dismissal, receiving check vouchers indicating her salaries/wages, benefits,
13th month pay, bonuses and allowances, as well as deductions and Social Security contributions from. When petitioner
was designated General Manager, respondent corporation made a report to the SSS. Petitioners membership in the SSS
evinces the existence of an employer-employee relationship between petitioner and respondent corporation. The coverage
of Social Security Law is predicated on the existence of an employer-employee relationship.

The corporation constructively dismissed petitioner when it reduced her. This amounts to an illegal termination of
employment, where the petitioner is entitled to full back wages.

A diminution of pay is prejudicial to the employee and amounts to constructive dismissal. Constructive dismissal
is an involuntary resignation resulting in cessation of work resorted to when continued employment becomes impossible,
unreasonable or unlikely; when there is a demotion in rank or a diminution in pay; or when a clear discrimination,
insensibility or disdain by an employer becomes unbearable to an employee. Petition is GRANTED.

67. DANILO TABAS ET. AL VS. CALIFORNIA MANUFACTURING CO., INC.

FACTS: Petitioners filed a petition in the NLRC for reinstatement and payment of various benefits against California
Manufacturing Company. The respondent company then denied the existence of an employer-employee relationship
between the company and the petitioners.

Pursuant to a manpower supply agreement, it appears that the petitioners prior their involvement with California
Manufacturing Company were employees of Livi Manpower service, an independent contractor, which assigned them to
work as promotional merchandisers. The agreement provides that:

California has no control or supervisions whatsoever over Livis workers with respect to how they accomplish their work
or perform Californias obligation It was further expressly stipulated that the assignment of workers to California shall be
on a seasonal and contractual basis; that cost of living allowance and the 10 legal holidays will be charged directly to
[California] at cost ; and that payroll for the preceding [sic] week shall be delivered by [Livi] at [Californias] premises.

ISSUE: WON principal employer is liable.

HELD: Yes. The existence of an employer-employee relation cannot be made the subject of an agreement. Based on Article
106, labor-only contractor is considered merely as an agent of the employer, and the liability must be shouldered by either
one or shared by both.

There is no doubt that in the case at bar, Livi performs manpower services, meaning to say, it contracts out labor
in favor of clients. We hold that it is one notwithstanding its vehement claims to the contrary, and notwithstanding the
provision of the contract that it is an independent contractor. The nature of ones business is not determined by self-
serving appellations one attaches thereto but by the tests provided by statute and prevailing case law. The bare fact that
Livi maintains a separate line of business does not extinguish the equal fact that it has provided California with workers to
pursue the latters own business. In this connection, we do not agree that the petitioners had been made to perform activities
which are not directly related to the general business of manufacturing, Californias purported principal operation
activity. Livi, as a placement agency, had simply supplied California with the manpower necessary to carry out its
(Californias) merchandising activities, using its (Californias) premises and equipment.

68. BROTHERHOOD LABOR UNITY MOVEMENT OF THE PHIL. V. ZAMORA

FACTS: The petitioners are workers who have been employed at the San Miguel Parola Glass Factory as pahinantes or
kargadors for almost seven years. They worked exclusively at the SMC plant, never having been assigned to other
companies or departments of San Miguel Corp, even when the volume of work was at its minimum. Their work was neither
regular nor continuous, depending on the volume of bottles to be loaded and unloaded, as well as the business activity of
the company. However, work exceeded the eight-hour day and sometimes, necessitated work on Sundays and holidays. -
for this, they were neither paid overtime nor compensation.

Sometime in 1969, the workers organized and affiliated themselves with Brotherhood Labor Unity Movement
(BLUM). They wanted to be paid to overtime and holiday pay. They pressed the SMC management to hear their grievances.
BLUM filed a notice of strike with the Bureau of Labor Relations in connection with the dismissal of some of its members.
San Miguel refused to bargain with the union alleging that the workers are not their employees but the employees of an
independent labor contracting firm, Guaranteed Labor Contractor.

The workers were then dismissed from their jobs and denied entrance to the glass factory despite their regularly
reporting for work. A complaint was filed for illegal dismissal and unfair labor practices.

ISSUE: Whether or not there was employer-employee (ER-EE) relationship between the workers and San Miguel Corp.

HELD:
YES. In determining if there is an existence of the (ER-EE) relationship, the four-fold test was used by the Supreme Court.
These are:

The selection and engagement of the employee

Payment of wages

Power of dismissal

Control Test- the employers power to control the employee with respect to the means and methods by which work
is to be accomplished

In the case, the records fail to show that San Miguel entered into mere oral agreements of employment with the
workers. Considering the length of time that the petitioners have worked with the company, there is justification to conclude
that they were engaged to perform activities necessary in the usual business or trade. Despite past shutdowns of the glass
plant, the workers promptly returned to their jobs. The term of the petitioners employment appears indefinite and the
continuity and habituality of the petitioners work bolsters the claim of an employee status.

As for the payment of the workers wages, the contention that the independent contractors were paid a lump sum
representing only the salaries the workers where entitled to have no merit. The amount paid by San Miguel to the contracting
firm is no business expense or capital outlay of the latter. What the contractor receives is a percentage from the total earnings
of all the workers plus an additional amount from the earnings of each individual worker.

The power of dismissal by the employer was evident when the petitioners had already been refused entry to the
premises. It is apparent that the closure of the warehouse was a ploy to get rid of the petitioners, who were then agitating
the company for reforms and benefits.

The inter-office memoranda submitted in evidence prove the companys control over the workers. That San Miguel
has the power to recommend penalties or dismissal is the strongest indication of the companys right of control over the
workers as direct employer.

SC ordered San Miguel to reinstate the petitioners with 3 years backwages.

69. GREAT PACIFIC LIFE ASSURANCE CORPORATION vs. HONORATO JUDICO and NLRC

FACTS: On June 09, 1976, Great Pacific Life Assurance Corporation (Grepalife, for brevity) entered into an agreement
of agency with Honorato Judico to become a debit agent to the industrial life agency.

Debit agent-an insurance agent selling/servicing industrial life plans and policy holders.

Industrial life plans-are those whose premiums are payable either daily, weekly or monthly and which are collectible b
the debit agents at the home or any place designated by the policy holder.

As a debit agent, Judico had definite work assignments including but not limited to collections of premiums from
policy holders and selling insurance to prospective clients. Judico was initially paid P200.00 as allowance for thirteen
(13) weeks regardless of production and later a certain percentage denominated as sales reserve of his total collections
but not lesser than P200.00. In September 1981, he was promoted to the position of Zone Supervisor and paid additional
(supervisors) allowance fixed at P110,00 per week. However, two months thereafter, he was reverted to his former
position as debit agent, but, for unknown reasons, not paid so-called weekly sales reserve of at least P200.00. Finally, on
June 28, 1982, he was dismissed by way of termination of his agency contract.

The Contentions of the petitioner are:

Judicos compensation was not based on any fixed number of hours but was based on actual production.
 Judicos compensation, in the form of commissions and bonuses, cannot be construed as salary, but as a subsidy
or way of assistance for transportation and meal expenses of a new debit agent during the initial period of his
training which was fixed for thirteen (13) weeks.

The Contentions of the respondent are adopted by SC in its ruling.

Ruling of the Labor Arbiter (LA) In favor of Grepalife : The LA dismissed the complaint on the ground that no
employer-employee relationship exist.

Ruling of the NLRC - In favor of Honorato Judico: It ruled that Judico is a regular employee as defined under Article
281 of the Labor Code.

Art. 281. Probationary employment. Probationary employment shall not exceed six (6) months from the date the
employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services
of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to
qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at
the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a
regular employee.

Not convinced, the matter was elevated to the Supreme Court.

ISSUE: Whether or not: (1) the debit agent is considered as regular employee; and (2) the dismissal was valid.

HELD:

Salaried employees vs. Registered representatives

1. In Investment Planning Corp. vs. SSS, 21 SCRA 294, an insurance agent may have two classes of agents who sell
its insurance policies.

a. Salaried employees who keep definite hours and work under the control and supervision of the company.

b. Registered representatives who works on a commission basis.

These agents are not required to report for work anytime;

They do not have to devote their time exclusively to or work exclusively for the company since the time and
effort they spend in their work depend entirely upon their own will and initiative;
They are not required to account for their time nor submit a report of their activities;
They shoulder their own selling and transportation expenses; and
They are paid their commission based on a certain percentage of their sales.

Element of control

2. The test is whether the employer controls or has reserved the right to control the employee not only as to the result
of the work to be done but also as to the means and methods by which the same is to be accomplished.

3. In this case, the element of control is evident.

The element of control by the petitioner on Judico was very much present.
The record shows that petitioner Judico received a definite minimum amount per week as his wage known as
"sales reserve" wherein the failure to maintain the same would bring him back to a beginner's employment with
a fixed weekly wage of P 200.00 for thirteen weeks regardless of production.
He was assigned a definite place in the office to work on when he is not in the field; and in addition to his
canvassing work he was burdened with the job of collection.
 In both cases he was required to make regular report to the company regarding these duties, and for which an
anemic performance would mean a dismissal.
Conversely faithful and productive service earned him a promotion to Zone Supervisor with additional
supervisor's allowance, a definite amount of P110.00 aside from the regular P 200.00 weekly "allowance".
Furthermore, his contract of services with petitioner is not for a piece of work nor for a definite period.

Ordinary commission insurance agent in brief.

4. An ordinary commission agent works at his own volition or at his own leisure without fear of dismissal from the company
and short of committing acts detrimental to the business interest of the company or against the latter, whether he produces
or not is of no moment as his salary is based on his production, his anemic performance or even dead result does not
become a ground for dismissal.

The appealed decision of AFFIRMED in toto.

70. FEATI UNIVERSITY V. BAUTISTA

FACTS: The private respondent wrote a letter to president of petitioner informing her of the organization of the Faculty
Club into a registered labor union. President of the Faculty Club sent another letter containing twenty-six demands that have
connection with the employment of the members of the Faculty Club by the University, and requesting an answer within
ten days from receipt thereof. The President of the University answered the two letters, requesting that she be given at least
thirty days to study thoroughly the different phases of the demands.

Meanwhile counsel for the University, to whom the demands were referred, wrote a letter to the President of the
Faculty Club demanding proof of its majority status and designation as a bargaining representative. President of the Faculty
Club filed a notice of strike with the Bureau of Labor alleging as reason therefore the refusal of the University to bargain
collectively. The parties were called to conferences but efforts to conciliate them failed.

Members of the Faculty Club declared a strike and established picket lines in the premises of the University,
resulting in the disruption of classes in the University. President of the Philippines certified to the Court of Industrial
Relations the dispute between the management of the University and the Faculty Club pursuant to the provisions of Section
10 of Republic Act No. 875.

The Judge endeavoured to reconcile the part and it was agreed upon that the striking faculty members would return
to work and the University would readmit them under a status quo arrangement. On that very same day, however, the
University, thru counsel filed a motion to dismiss the case upon the ground that the CIR has no jurisdiction over the case,
because (1) the Industrial Peace Act is not applicable to the University, it being an educational institution, nor to the members
of the Faculty Club, they being independent contractors; and (2) the presidential certification is violative of Section 10 of
the Industrial Peace Act, as the University is not an industrial establishment and there was no industrial dispute which could
be certified to the CIR.

The respondent judge denied the motion to dismiss. The University filed a motion for reconsideration by the CIR
en banc, without the motion for reconsideration having been acted upon by the CIR en banc, respondent Judge set the case
for hearing but the University moved the cancellation of the said hearing upon the ground that the court en banc should first
hear the motion for reconsideration and resolve the issues raised therein before the case is heard on the merits but denied.

Faculty Club filed with the CIR in Case 41-IPA a petition to declare in contempt of court certain parties, alleging
that the University refused to accept back to work the returning strikers, in violation of the return-to-work order.

The University filed its opposition to the petition for contempt by way of special defense that there was still the
motion for reconsideration which had not yet been acted upon by the CIR en banc. Hence, this petition.

ISSUE: Whether or not FEATI is an employer within the purview of the Industrial Peace Act.
HELD: The Supreme Court denied the petition. Based on RA 875 Section 2(c) The term employer include any person
acting in the interest of an employer, directly or indirectly, but shall not include any labor organization (otherwise than when
acting as an employer) or any one acting in the capacity or agent of such labor organization.

In this case, the University is operated for profit hence included in the term of employer. Professors and instructors,
who are under contract to teach particular courses and are paid for their services, are employees under the Industrial Peace
Act.

Professors and instructors are not independent contractors. university controls the work of the members of its
faculty; that a university prescribes the courses or subjects that professors teach, and when and where to teach; that the
professors work is characterized by regularity and continuity for a fixed duration; that professors are compensated for their
services by wages and salaries, rather than by profits; that the professors and/or instructors cannot substitute others to do
their work without the consent of the university; and that the professors can be laid off if their work is found not satisfactory.
All these indicate that the university has control over their work; and professors are, therefore, employees and not
independent contractors.

71. CITIZENS' LEAGUE OF FREEWORKERS AND/OR BALBINO EPIS, NICOLAS ROJO, ET AL. vs. HON.
MACAPANTON ABBAS, Judge of the Court of First Instance of Davao and TEOFILO GERONIMO and
EMERITA MENDEZ

Facts:

On March 11, 1963 the respondents filed a complaint to restrain the Citizens' League of Freeworkers, a legitimate labor
organization (referred to as union) from interfering in with the respondents auto-calesas business in Davao and to recover
damages from committing certain acts complained of in connection therewith. The union members who were drivers of the
said business, alleges that the defendants named therein used to lease the auto-calesas of the spouses on a daily rental basis
and that the same does not recognize the union as their employees rather the petitioners were treated as lessees and refuses
to bargain with them. The union declared a strike on February 20, 1963, to which paralyzed plaintiffs' business operations
through threats, intimidation and violence. The writ was granted.

On March 18, 1963, petitioners filed a motion to declare the writ of preliminary injunction void on the ground that the same
had expired by virtue of Section 9 (d) of Republic Act 875. In his order of March 21, 1963, however, the respondent judge
denied said motion on the ground that there was no employer-employee relationship between respondents-spouses and the
individual petitioners herein and that, consequently, the Rules of Court and not Republic Act No. 875 applied to the matter
of injunction. Thereupon the petition under consideration was filed.

Issue:

Whether or not there is an employer-employee relationship existing from a daily rental basis company?

Held:

In the case of Isabelo Doce vs. Workmen's Compensation Commission, et al. (G.R. No. L-9417, December 22, 1958), upon
a similar if not an altogether identical set of facts, We held:

"The only features that would make the relationship of lessor and lessee between the respondent, owner of the jeeps, and
the drivers, members of the petitioner union, are the fact that he does not pay them any fixed wage but their compensation
is the excess of the total amount of fares earned or collected by them over and above the amount of P7.50 which they agreed
to pay to the respondent, and the fact that the gasoline burned by the jeeps is for the account of the drivers. These two
features are not, however, sufficient to withdraw the relationship, between them from that of employer-employee, because
the estimated earnings for fares must be over and above the amount they agreed to pay to the respondent for a ten-hour shift
or ten-hour a day operation of the jeeps. Not having any interest in the business because they did not invest anything in the
acquisition of the jeeps and did not participate in the management thereof, their service as drivers of the jeeps being their
only contribution to the business, the relationship of lessor and lessee cannot be sustained."

Wherefore, judgment is hereby rendered setting aside the writ of preliminary injunction issued by the respondent
judge in Civil Case No. 3966 of the Court of First Instance of Davao, with costs.

72. MAKATI HABERDASHERY VS NLRC

G.R. NO. 83380-81
NOVEMBER 15, 1989
FACTS: Petition for certiorari to review the decision of the NLRC which affirmed the decision of the Labor Arbiter who
jointly heard and decided two cases filed by the Union in behalf of the private respondents. Individual complainants are
working for Makati Haberdashery Inc as tailors, seamstress, sewers, basters, and plantsadoras and are paid on a piece-
rate basis (except two petitioners who are paid on a monthly basis) In addition, they are given a daily allowance of P 3.00
provided they report before 9:30 a.m.everyday. Work schedule: 9:30-6 or 7 p.m., Mondays to Saturdays and even on
Sundays and holidays during peak periods. The Sandigan ng Manggagawang Pilipino filed a complaint for underpayment
of the basic wages, underpayment of living allowance, nonpayment of overtime work, nonpayment of holiday pay, and
other money claims. The Labor Arbiter rendered judgment in favor of complainants which the NLRC affirmed but limited
back wages to one year. Petitioner urged that the NLRC erred in concluding that an employer-employee relationship existed
between the petitioner and the workers.

Issue: 1. WON employees paid on piece-rate basis are entitled to service incentive pay?
WON there is an Employer-Employee Relationship?

Held:
No, fall under exceptions set forth in the implementing rules (this will be reexamined under Article 101).
Yes, evident in a Memorandum issued by the Assistant Manager.

Ratio:
As to the service incentive leave pay: as piece-rate workers being paid at a fixed amount for performing work irrespective
of time consumed in the performance thereof, they fall under the exceptions stated in Sec1(d), Rule V, IRR, Book III, Labor
Code. Service Incentive Leave SECTION 1. Coverage. This rule shall apply to all employees except:(d) Field personnel
and other employees whose performance is unsupervised by the employer including those who are engaged on task or
contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time
consumed in the performance thereof;
Employer-Employee Relationship. There is such relationship because in the application of the four-fold test, it was found
that petitioners had control over the respondents not only as to the result but also as to the means and method by which the
same is to be accomplished.

73. CAURDANETAAN PIECE WORKERS UNION VS. UNDERSECRETARY BIENVENIDO LAGUESMA

G.R. NO. 113542
February 24, 1998

FACTS:
Complainants worked as cargador at the warehouse and rice mills of Private Respondent Corfarm. As cargadores, they
loaded, unloaded and piled sacks of palay from the warehouse to the cargo trucks and those brought by cargo trucks for
delivery to different places. They were paid by Corfarm on a piece-rate basis. When Corfarm denied them some benefits,
they formed their union. Corfarm replaced them with non-members of the union.

Respondent Corfarm denies that it had the power of control over the complainants rationalizing that they were street-hired
workers engaged from time to time to do loading and unloading work; there was no superintendent-in-charge to give orders;
and there were no gate passes issued, nor tools, equipment and paraphernalia issued by Cofarm for loading and unloading.
It attributes error to the Solicitor General's reliance on Art. 280 of the Labor Code. Citing Brent School, Inc. vs. Zamora,
private respondent asserts that a literal application of such article will result in absurdity, where petitioners members will
be regular employees not only of respondents but also of several other rice mills, where they were allegedly also under
service. Finally, Corfarm submits that the OSGs position is negated by the fact that petitioners members contracted for
loading and unloading services with respondent company when such work was available and when they felt like it.

ISSUE:
Whether or not the street-hired cargadores are considered as regular emplyoyees.

HELD:
The court considers the cargadores as regular employee. It is undeniable that petitioner's members worked as cargadores for
private respondent. They loaded, unloaded and piled sacks of palay from the warehouses to the cargo trucks and from the
cargo trucks to the buyers. This work is directly related, necessary and vital to the operations of Cofarm. Moreover, Cofarm
did not even allege, much less prove, that petitioner's members have substantial capital or investment in the form of tools,
equipment, machineries, and work premises among others. Furthermore, said respondent did not contradict petitioner's
allegation that it paid wages directly to these workers without the intervention of any third party independent contractor. It
also wielded the power of dismissal over the petitioners. Clearly, the workers are not independent contractors.

74. RUGA ET. AL VS NLRC

G.R. NO. L-72654-61
JANUARY 22, 1990

FACTS:
On September 11, 1983 upon arrival at the fishing port, petitioners were told by Jorge de Guzman, president of private
respondent, to proceed to the police station at Camaligan, Camarines Sur, for investigation on the report that they sold some
of their fish-catch at midsea to the prejudice of private respondent. Petitioners denied the charge claiming that the same was
a countermove to their having formed a labor union and becoming members of Defender of Industrial Agricultural Labor
Organizations and General Workers Union (DIALOGWU) on September 3, 1983.

During the investigation, no witnesses were presented to prove the charge against petitioners, and no criminal charges were
formally filed against them. Notwithstanding, private respondent refused to allow petitioners to return to the fishing vessel
to resume their work on the same day, September 11, 1983.

On September 22, 1983, petitioners individually filed their complaints for illegal dismissal and non-payment of 13th month
pay, emergency cost of living allowance and service incentive pay, with the then Ministry (now Department) of Labor and
Employment, Regional Arbitration Branch No. V, Legaspi City, Albay, docketed as Cases Nos. 1449-83 to 1456-83. 2 They
uniformly contended that they were arbitrarily dismissed without being given ample time to look for a new job.
On October 24, 1983, private respondent, thru its operations manager, Conrado S. de Guzman, submitted its position paper
denying the employer-employee relationship between private respondent and petitioners on the theory that private
respondent and petitioners were engaged in a joint venture. 3

After the parties failed to reach an amicable settlement, the Labor Arbiter scheduled the case for joint hearing furnishing
the parties with notice and summons. On December 27, 1983, after two (2) previously scheduled joint hearings were
postponed due to the absence of private respondent, one of the petitioners herein, Alipio Ruga, the pilot/captain of the 7/B
Sandyman II, testified, among others, on the manner the fishing operations were conducted, mode of payment of
compensation for services rendered by the fishermen-crew members, and the circumstances leading to their dismissal.
On March 31, 1984, after the case was submitted for resolution, Labor Arbiter Asisclo S. Coralde rendered a joint
decision 5 dismissing all the complaints of petitioners on a finding that a "joint fishing venture" and not one of employer-
employee relationship existed between private respondent and petitioners.

From the adverse decision against them, petitioners appealed to the National Labor Relations Commission.
On May 30, 1985, the National Labor Relations Commission promulgated its resolution 6 affirming the decision of the labor
arbiter that a "joint fishing venture" relationship existed between private respondent and petitioners.

Issue:
whether or not the fishermen-crew members of the trawl fishing vessel 7/B Sandyman II are employees of its owner-
operator, De Guzman Fishing Enterprises, and if so, whether or not they were illegally dismissed from their employment.

Held:
Petitioners assail the ruling of the public respondent NLRC that what exists between private respondent and petitioners is a
joint venture arrangement and not an employer-employee relationship.

Aside from seeking the dismissal of the petition on the ground that the decision of the labor arbiter is now final and executory
for failure of petitioners to file their appeal with the NLRC within 10 calendar days from receipt of said decision pursuant
to the doctrine laid down in Vir-Jen Shipping and Marine Services, Inc. vs. NLRC, 115 SCRA 347 (1982), the Solicitor
General claims that the ruling of public respondent that a "joint fishing venture" exists between private respondent and
petitioners rests on the resolution of the Social Security System (SSS) in a 1968 case, Case No. 708 (De Guzman Fishing
Enterprises vs. SSS), exempting De Guzman Fishing Enterprises, private respondent herein, from compulsory coverage of
the SSS on the ground that there is no employer-employee relations between the boat-owner and the fishermen-crew
members following the doctrine laid down in Pajarillo vs. SSS, 17 SCRA 1014 (1966). In applying to the case at bar the
doctrine in Pajarillo vs. SSS, supra, that there is no employer-employee relationship between the boat-owner and the pilot
and crew members when the boat-owner supplies the boat and equipment while the pilot and crew members contribute the
corresponding labor and the parties get specific shares in the catch for their respective contribution to the venture, the
Solicitor General pointed out that the boat-owners in the Pajarillo case, as in the case at bar, did not control the conduct of
the fishing operations and the pilot and crew members shared in the catch.

Fundamental considerations of substantial justice persuade Us to decide the instant case on the merits rather than to dismiss
it on a mere technicality. In so doing, we exercise the prerogative accorded to this Court enunciated in Firestone Filipinas
Employees Association, et al. vs. Firestone Tire and Rubber Co. of the Philippines, Inc., 61 SCRA 340 (1974), thus "the
well-settled doctrine is that in labor cases before this Tribunal, no undue sympathy is to be accorded to any claim of a
procedural misstep, the idea being that its power be exercised according to justice and equity and substantial merits of the
controversy."

We have consistently ruled that in determining the existence of an employer-employee relationship, the elements that are
generally considered are the following (a) the selection and engagement of the employee; (b) the payment of wages; (c) the
power of dismissal; and (d) the employer's power to control the employee with respect to the means and methods by which
the work is to be accomplished. The employment relation arises from contract of hire, express or implied. In the absence
of hiring, no actual employer-employee relation could exist.

The conclusion of public respondent that there had been no change in the situation of the parties since 1968 when De
Guzman Fishing Enterprises, private respondent herein, obtained a favorable judgment in Case No. 708 exempting it from
compulsory coverage of the SSS law is not supported by evidence on record. It was erroneous for public respondent to apply
the factual situation of the parties in the 1968 case to the instant case in the light of the changes in the conditions of
employment agreed upon by the private respondent and petitioners as discussed earlier.

While tenure or length of employment is not considered as the test of employment, nevertheless the hiring of petitioners to
perform work which is necessary or desirable in the usual business or trade of private respondent for a period of 8-15 years
since 1968 qualify them as regular employees within the meaning of Article 281 of the Labor Code as they were indeed
engaged to perform activities usually necessary or desirable in the usual fishing business or occupation of private
respondent.
Furthermore, the fact that on mere suspicion based on the reports that petitioners allegedly sold their fish-catch at midsea
without the knowledge and consent of private respondent, petitioners were unjustifiably not allowed to board the fishing
vessel on September 11, 1983 to resume their activities without giving them the opportunity to air their side on the accusation
against them unmistakably reveals the disciplinary power exercised by private respondent over them and the corresponding
sanction imposed in case of violation of any of its rules and regulations. The virtual dismissal of petitioners from their
employment was characterized by undue haste when less extreme measures consistent with the requirements of due process
should have been first exhausted. In that sense, the dismissal of petitioners was tainted with illegality.

WHEREFORE, in view of the foregoing, the petition is GRANTED. The questioned resolution of the National Labor
Relations Commission dated May 30,1985 is hereby REVERSED and SET ASIDE. Private respondent is ordered to
reinstate petitioners to their former positions or any equivalent positions with 3-year backwages and other monetary benefits
under the law. No pronouncement as to costs.
SO ORDERED.

75. AGRO-COMMERCIAL SECURITY AGENCY VS. NLRC

G.R. Nos. 82823-24 Julyv31, 1989

FACTS:

In July 25, 1986, respondents numbering 46 in all, who worked as security guards and janitors for Agro Commercial Security
Services Agency, Inc. , filed a complaint against their Agro Commercial for illegal dismissal before the Arbitration Branch
of DOLE, after having placed on floating status for several months. Petitioners service contracts with various
corporations and government agencies were terminated due to sequestration by the PCGG.

They sought the payment of their respective separation pay, 13th month for 1986, and service incentive pay. The Labor
arbiter ruled in favour of the respondents and was affirmed by the NLRC.

Hence, the Agro Commercial filed a petition assailing said decision, alleging that they were denied due process of law by
the NLRC and it committed a grave abuse of discretion,

ISSUE: Whether or not there exists an employer-employee relationship between private respondents and petitioner, Agro
Commercial.

HELD:

Yes. In determining the exi=stence of of an employee-employer relationship, the following elements are generally
considered:

(1) Selection and engagement of the employees;

(2) Payment of wages;
(3) The power of dismissal; and
(4) The power to control the employees conduct
It can be easily deduced in the respondents employment contracts that the above elements are present and therefore they are
regular employees who enjoy security of tenure and cannot be dismissed except for cause.
Under Article 286 of the Labor Code, it states that a bonafide suspension of business operation for a period not exceeding
6 months shall not terminate employment.

Thus in analogy , if the security guards remained without work or in floating status for a period exceeding 6 months then
they are in effect constructively dismissed.

Except for the 27 respondents who accepted employment without resigning from employment with petitioner, a just reason
for their termination, 17 were in floating status for more than 6 months and therefore unreasonable and may be considered
to have been illegally dismissed.

The court dismissed the complaint of the 27 for lack of merit and upheld the NLRCs decision for the 17 illegally dismissed
employees.

76. MARAGUINOT AND P. ENERO VS NLRC AND VIVA FILMS

GR NO. 120969
JANUARY 22, 1998

FACTS:

Maraguinot and Enero were separately hired by Vic Del Rosario under Viva Films as part of the filming crew. Sometime
in May 1992, sought the assistance of their supervisor to facilitate their request that their salary be adjusted in accordance
with the minimum wage law.

On June 1992, Mrs. Cesario, their supervisor, told them that Mr. Vic Del Rosario would agree to their request only if they
sign a blank employment contract. Petitioners refused to sign such document. After which, the Mr. Enero was forced to go
on leave on the same month and refused to take him back when he reported for work. Mr. Maraguinot on the other hand
was dropped from the payroll but was returned days after. He was again asked to sign a blank employment contract but
when he refused, he was terminated.

Consequently, the petitioners sued for illegal dismissal before the Labor Arbiter. The private respondents claim the
following: (a) that VIVA FILMS is the trade name of VIVA PRODUCTIONS, INC. and that it was primarily engaged in
the distribution & exhibition of movies- but not then making of movies; (b) That they hire contractors called producers
who act as independent contractors as that of Vic Del Rosario; and (c) As such, there is no employee-employer relation
between petitioners and private respondents.

The Labor Arbiter held that the complainants are employees of the private respondents. That the producers are not
independent contractor but should be considered as labor-only contractors and as such act as mere agent of the real employer.
Thus, the said employees are illegally dismissed.

The private respondents appealed to the NLRC which reversed the decision of the Labor Arbiter declaring that the
complainants were project employees due to the ff. reasons: (a) Complainants were hired for specific movie projects and
their employment was co-terminus with each movie project; (b)The work is dependent on the availability of projects. As a
result, the total working hours logged extremely varied; (c) The extremely irregular working days and hours of complainants
work explains the lump sum payment for their service; and (d) The respondents alleged that the complainants are not
prohibited from working with other movie companies whenever they are not working for the independent movie producers
engaged by the respondents.

A motion for reconsideration was filed by the complainants but was denied by NLRC. In effect, they filed an instant petition
claiming that NLRC committed a grave abuse of discretion in: (a) Finding that petitioners were project employees; (b)
Ruling that petitioners were not illegally dismissed; and (c) Reversing the decision of the Labor Arbiter.

In the instant case, the petitioners allege that the NLRC acted in total disregard of evidence material or decisive of the
controversy.
Issues:

(a) W/N there exist an employee- employer relationship between the petitioners and the private respondents.

(b) W/N the private respondents are engaged in the business of making movies.

(c) W/N the producer is a job contractor.

Held:

There exist an employee- employer relationship between the petitioners and the private respondents because of the ff.
reasons that nowhere in the appointment slip does it appear that it was the producer who hired the crew members. Moreover,
it was VIVAs corporate name appearing on heading of the slip. It can likewise be said that it was VIVA who paid for the
petitioners salaries.

Respondents also admit that the petitioners were part of a work pool wherein they attained the status of regular employees
because of the ff. requisites: (a) There is a continuous rehiring of project employees even after cessation of a project; (b)
The tasks performed by the alleged project employees are vital, necessary and indispensable to the usual business or trade
of the employer; and (c) However, the length of time which the employees are continually re-hired is not controlling but
merely serves as a badge of regular employment.

Since the producer and the crew members are employees of VIVA and that these employees works deal with the making
of movies. It can be said that VIVA is engaged of making movies and not on the mere distribution of such.

The producer is not a job contractor because of the ff. reasons: (Sec. Rule VII, Book III of the Omnibus Rules Implementing
the Labor Code.)

a. A contractor carries on an independent business and undertakes the contract work on his own account under his own
responsibility according to his own manner and method, free from the control and direction of his employer or principal in
all matters connected with the performance of the work except as to the results thereof. The said producer has a fix time
frame and budget to make the movies.

b. The contractor should have substantial capital and materials necessary to conduct his business. The said producer, Del
Rosario, does not have his own tools, equipment, machinery, work premises and other materials to make motion pictures.
Such materials were provided by VIVA.

It can be said that the producers are labor-only contractors. Under Article 106 of the Labor Code (reworded) where the
contractor does not have the requisites as that of the job contractors.

77. COCA COLA BOTTLERS INC v. DELA CRUZ

Where the contractors were merely suppliers of labor, the contracted personnel, engaged in component functions in the main
business of the company under the latters supervision and control, cannot but be regular company employees.

FACTS:
Respondents Dela Cruz et.al. filed complaints for regularization with money claims against Coca-Cola Bottlers. The
respondents alleged they are route helpers who go from the Coca- Cola sales offices or plants to customer outlets, and doing
such, their jobs are necessary and desirable in its main business. They further alleged that they worked under the control
and supervision of the companys supervisors who prepared their work schedules and assignments. They argued that the
petitioners contracts of services with Peerless and Excellent are in the nature of labor-only contracts prohibited by law
since Peerless and Excellent did not have sufficient capital or investment to provide services to the petitioner.

Coca-cola, the petitioner, contended that it entered into contracts of services with Peerless and Excellent Partners to provide
allied services and that the contractors shall pay the salaries of all personnel assigned to the petitioner. It claimed that its
main business is softdrinks manufacturing and the respondents tasks of sale and distribution are not part of the
manufacturing process. The petitioner posited that there is no employer-employee relationship between the company and
the respondents and the complaints should be dismissed for lack of jurisdiction.

The labor arbiter and the NLRC dismissed the case. CA reversed the decision and denied the motion for reconsideration.
Thus this petition.

ISSUE:
W/N Excellent and Peerless were independent labor contractors or labor-only contractors.

HELD:
Article 106 which provides: Whenever, an employer enters into a contract with another person for the performance of the
formers work, the employees of the contractor and of the latters subcontractor shall be paid in accordance with the
provisions of this Code. x x x There is labor-only contracting where the person supplying workers to an employer does
not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and
the workers recruited and placed by such persons are performing activities which are directly related to the principal business
of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who
shall be responsible to the workers in the same manner and extent as if the alter were directly employed by him.

The CA noted that both the contracts for Peerless and the Excellent show that their obligation was solely to provide the
company with the services of contractual employees, and nothing more. Peerless and Excellent were mere suppliers of
labor who had no sufficient capitalization and equipment to undertake sales and distribution of softdrinks as independent
activities separate from the manufacture of softdrinks, and who had no control and supervision over the contracted
personnel. They are therefore labor-only contractors. Consequently, the contracted personnel, engaged in component
functions in the main business of the company under the latters supervision and control, cannot but be regular company
employees.

78. TEMIC AUTOMOTIVE PHILIPPINES, INC., vs.

TEMIC AUTOMOTIVE PHILIPPINES, INC. EMPLOYEES UNION-FFW

Facts

The petitioner is a corporation engaged in the manufacture of electronic brake systems and comfort body electronics for
automotive vehicles. The respondent union is the exclusive bargaining agent of the petitioner's rank-and-file employees. On
May 6, 2005, the petitioner and the union executed a collective bargaining agreement (CBA) for the period January 1, 2005
to December 31, 2009.

The petitioner is composed of several departments, one of which is the warehouse department consisting of two warehouses
- the electronic braking system and the comfort body electronics. These warehouses are further divided into four sections -
receiving section, raw materials warehouse section, indirect warehouse section and finished goods section. The union
members are regular rank-and-file employees working in these sections as clerks, material handlers, system encoders and
general clerks.

By practice established since 1998, the petitioner contracts out some of the work in the warehouse department, specifically
those in the receiving and finished goods sections, to three independent service providers or forwarders (forwarders). These
forwarders also have their own employees who hold the positions of clerk, material handler, system encoder and general
clerk. The regular employees of the petitioner and those of the forwarders share the same work area and use the same
equipment, tools and computers all belonging to the petitioner.

This outsourcing arrangement gave rise to a union grievance on the issue of the scope and coverage of the collective
bargaining unit, specifically to the question of "whether or not the functions of the forwarders employees are functions
being performed by the regular rank-and-file employees covered by the bargaining unit." The union thus demanded that the
forwarders' employees be absorbed into the petitioner's regular employee force and be given positions within the bargaining
unit. The petitioner, on the other hand, on the premise that the contracting arrangement with the forwarders is a valid exercise
of its management prerogative, posited that the union's position is a violation of its management prerogative to determine
who to hire and what to contract out, and that the regular rank-and-file employees and their forwarders employees serving
as its clerks, material handlers, system encoders and general clerks do not have the same functions as regular company
employees.

The union and the petitioner failed to resolve the dispute at the grievance machinery level, thus necessitating recourse to
voluntary arbitration. To support its position, the union submitted in evidence a copy of the complete manpower complement
of the petitioner's warehouse department and the affidavits of several people who described their work. The petitioner
invoked the exercise of its management prerogative and its authority under this prerogative to contract out to independent
service providers the forwarding, packing, loading of raw materials and/or finished goods and all support and ancillary
services (such as clerical activities) for greater economy and efficiency in its operations. The voluntary arbitrator ruled in
favor of the union and the CA affirmed its decision.

Issue

Whether the contracting out arrangement is valid.

Held

Yes. In Meralco v. Quisumbing, the SC joined the universal recognition of outsourcing as a legitimate activity and held that
a company can determine in its best judgment whether it should contract out a part of its work for as long as the employer
is motivated by good faith; the contracting is not for purposes of circumventing the law; and does not involve or be the
result of malicious or arbitrary action. In this case, the petitioner's declared objective for the arrangement is to achieve
greater economy and efficiency in its operations a universally accepted business objective and standard that the union has
never questioned, thus negating the presence of bad faith. Also, no evidence was presented to show abuses and anything
detrimental to the status of the regular employees. The contract of the forwarding arrangement in the case at bar complies
with the requirements of the Labor Code and its IRR. The company controls its employees in the means, method and results
of their work, in the same manner that the forwarder controls its own employees in the means, manner and results of their
work. Complications and confusion result because the company at the same time controls the forwarder in the results of the
latters work, without controlling however the means and manner of the forwarder employees work.

More importantly, it should be noted that that the forwarding agreements were already in place when the current CBA was
signed. In this sense, the union accepted the forwarding arrangement, albeit implicitly, when it signed the CBA with the
company. Thereby, the union agreed, again implicitly by its silence and acceptance, that jobs related to the contracted
forwarding activities are not regular company activities and are not to be undertaken by regular employees falling within
the scope of the bargaining unit but by the forwarders employees.

79. ALIVIADO vs. PROCTER & GAMBLE PHILS., INC., and PROMM-GEM INC.,

Facts

P&G is principally engaged in the manufacture and production of different consumer and health products, which it sells on a wholesale basis to
various supermarkets and distributors. To enhance consumer awareness and acceptance of the products, P&G entered into contracts with Promm-
Gem and SAPS for the promotion and merchandising of its products. Aliviado and other petitioners worked as P&Gs merchandisers, and
individually signed employment contracts with either Promm-Gem or SAPS for periods of more or less five months at a time. They were assigned
at different outlets, supermarkets, and stores where they handled all the products of P&G, and received their wages from Promm-Gem or SAPS.
Promm-Gem and SAPS imposed disciplinary measures on erring merchandisers. In December 1991, petitioners filed a complaint against P&G for
regularization, service incentive leave pay, and other benefits, with damages. The Labor Arbiter dismissed the case for lack of merit and ruled that
there was no employer-employee relationship between the petitioners and P&G. He found that the selection and engagement of the petitioners, the
payment of their wages, the power of dismissal and control with respect to the means and methods by which their work was accomplished, were all
done by Promm-Gem/SAPS. He further found that Promm-Gem and SAPS were legitimate independent job contractors. The NLRC and the CA
subsequently affirmed the LAs findings.

Issue
Whether P&G is the employer of petitioners

Held

Yes.

In order to resolve the issue of whether P&G is the employer of petitioners, it is necessary to first determine whether Promm-
Gem and SAPS are labor-only contractors or legitimate job contractors. Clearly, the law and its implementing rules allow
contracting arrangements for the performance of specific jobs, works or services. However, in order for such outsourcing
to be valid, it must be made to an independent contractor because the current labor rules expressly prohibit labor-only
contracting.

To emphasize, there is labor-only contracting when the contractor or sub-contractor merely recruits, supplies or places
workers to perform a job, work or service for a principal and any of the following elements are present:

i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or
service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are
performing activities which are directly related to the main business of the principal; or

ii) The contractor does not exercise the right to control over the performance of the work of the contractual
employee.

Under the circumstances, Promm-Gem cannot be considered as a labor-only contractor. We find that it is a legitimate
independent contractor.

Considering that SAPS has no substantial capital or investment and the workers it recruited are performing activities which
are directly related to the principal business of P&G, we find that the former is engaged in labor-only contracting.

Where labor-only contracting exists, the Labor Code itself establishes an employer-employee relationship between the
employer and the employees of the labor-only contractor. The statute establishes this relationship for a comprehensive
purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer
and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed
by the principal employer.

80. GARDEN OF MEMORIES PARK and LIFE PLAN, INC. and PAULINA T. REQUIO, vs. NLRC

Facts

Petitioner Garden of Memories is engaged in the business of operating a memorial park situated at Calsadang Bago, Pateros,
Metro-Manila and selling memorial Plan and services.

Respondent Cruz, on the other hand, worked at the Garden of Memories Memorial Park as a utility worker from August
1991 until her termination in February 1998.

Cruz filed a complaint for illegal dismissal before the DOLE.

Sometime in February 1998, she had a misunderstanding with a co-worker named Adoracion Requio regarding the use of
a garden water hose. When the misunderstanding came to the knowledge of Requio, the latter instructed them to go home
and not to return anymore. After three (3) days, Cruz reported for work but she was told that she had been replaced by
another worker. She immediately reported the matter of her replacement to the personnel manager of Garden of Memories
and manifested her protest

Garden of Memories denied liability for the claims of Cruz and asserted that she was not its employee but that of Requio,
its independent service contractor, who maintained the park for a contract price. It insisted that there was no employer-
employee relationship between them because she was employed by its service contractor, Victoriana Requio (Victoriana),
who was later succeeded by her daughter, Paulina, when she (Victoriana) got sick.

Requio prayed for the dismissal of the complaint stating that it was her mother who hired Cruz, and she merely took over
when her mother got ill. She claimed that the ownership of the business was never transferred to her and that Cruz was not
dismissed from her employment but that she abandoned her work.
The Labor Arbiter ruled that R e q u i o was not an independent contractor but a labor-only contractor and that her defense
that Cruz abandoned her work was negated by the filing of the present case" The LA declared both Garden of Memories
and R e q u i o jointly and severally liable for the monetary claims of Cruz. The NLRC agreed with the Labor Arbiter.

Issue

Whether R e q u i o i s a l a b o r - o n l y c o n t r a c t o r

Held

Yes. There is labor-only contracting where: (a) the person supplying workers to an e m p l o y e r
d o e s n o t h a v e s u b s t a n t i a l c a p i t a l or investment i n t h e f o r m o f t o o l s , equipment, machineries, work
premises, among others; and (b) the workers recruited and placed by such a person are performing activities which
are directly related to the principal business of the employer.

Generally, the presumption is that the contractor is a labor-only contracting unless such contractor overcomes the burden of
proving that it has the substantial capital, investment, tools and the like.17 In the present case, though Garden of Memories
is not the contractor, it has the burden of proving that Requio has sufficient capital or investment since it is claiming the
supposed status of Requio as independent contractor. 18 Garden of Memories, however, failed to adduce evidence
purporting to show that Requio had sufficient capitalization. Neither did it show that she invested in the form of tools,
equipment, machineries, work premises and other materials which are necessary in the completion of the service contract.

Furthermore, Requio was not a licensed contractor. Her explanation that her business was a mere livelihood
program akin to a cottage industry provided by Garden of Memories as part of its contribution to the upliftment of the
underprivileged residing near the memorial park proves that her capital investment was not substantial. Substantial capital
or investment refers to capital stocks and subscribed capitalization in the case of corporations, tools, equipment, implements,
machineries, and work premises, actually and directly used by the contractor or subcontractor in the performance or
completion of the job, work or service contracted out. Obviously, Requio is a labor-only contractor.

Another determinant factor that classifies petitioner Requio as a labor-only contractor was her failure to exercise the right
to control the performance of the work of Cruz. This can be gleaned from the Service Contract Agreement between Garden
of Memories and Requio

81. NORKIS TRADING CORPORATION vs. BUENA VISTA et al.

Facts

The respondents were hired by Norkis Trading, a domestic corporation engaged in the business of manufacturing and
marketing of Yamaha motorcycles and multi-purpose vehicles. Although they worked for Norkis Trading as skilled workers
assigned in the operation of industrial and welding machines owned and used by Norkis Trading for its business, they were
not treated as regular employees by Norkis Trading. Instead, they were regarded by Norkis Trading as members of
PASAKA, a cooperative organized under the Cooperative Code of the Philippines, and which was deemed an independent
contractor that merely deployed the respondents to render services for Norkis Trading. The respondents nonetheless believed
that they were regular employees of Norkis Trading.
The respondents filed with the Department of Labor and Employment (DOLE) a complaint against Norkis Trading and
PASAKA for labor-only contracting and non-payment of minimum wage and overtime pay. The filing of the complaint led
to the suspension of their membership with PASAKA. They were served by PASAKA with memoranda charging them with
a violation of the rule against commission of acts injurious or prejudicial to the interest or welfare of the cooperative. The
memoranda cited that the respondents filing of a case against Norkis Trading had greatly prejudiced the interest and welfare
of the cooperative.

When the respondents were to report back to work but during the hearing in their NLRC case, they were informed by
PASAKA that they would be transferred to Norkis Tradings sister company, Porta Coeli Industrial Corporation (Porta
Coeli), as washers of Multicab vehicles. They opposed the transfer as it would result in a change of employers, from Norkis
Trading to Porta Coeli. They also believed that the transfer would result in a demotion since from being skilled workers in
Norkis Trading, they would be reduced to being utility workers. These circumstances made the respondents amend their
complaint for illegal suspension, to include the charges of unfair labor practice, illegal dismissal, damages and attorneys
fees.

On the other hand, Norkis Trading and PASAKA claimed that the respondents were not employees of Norkis Trading. They
insisted that the respondents were members of PASAKA, which served as an independent contractor that merely supplied
services to Norkis International Co., Inc. (Norkis International) pursuant to a job contract.

The Labor Arbiter dismissed the complaint. The allegation of unfair labor practice and claim for monetary awards were
likewise rejected. The respondents appealed to the NLRC. In the meantime, the regional director of DOLE ruled that
PASAKA was engaged in labor-only contracting. The respondents informed the NLRC of Regional Director Balanags
Order by filing a Manifestation. However, the NLRC still affirmed the decision of the Labor Arbiter.

The respondents then filed a petition with the CA which reversed the decision of the NLRC because in the Payroll Registers
for PASAKA, the respondents were included in the payroll for payroll periods before the contract with Norkis International
was executed. CA also considered the findings of the Regional Director of DOLE that PASAKA was engaged in labor-only
contracting.

Issue

Whether PASAKA is a labor-only contractor.

Held

Yes. Labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor merely recruits,
supplies, or places workers to perform a job, work, or service for a principal. In labor-only contracting, the following
elements are present: (a) the contractor or subcontractor does not have substantial capital or investment to actually perform
the job, work, or service under its own account and responsibility; and (b) the employees recruited, supplied or placed by
such contractor or subcontractor perform activities which are directly related to the main business of the principal. These
differentiate it from permissible or legitimate job contracting or subcontracting, which refers to an arrangement whereby a
principal agrees to put out or farm out with the contractor or subcontractor the performance or completion of a specific job,
work, or service within a definite or predetermined period, regardless of whether such job, work, or service is to be
performed or completed within or outside the premises of the principal. A person is considered engaged in legitimate job
contracting or subcontracting if the following conditions concur: (a) the contractor carries on a distinct and independent
business and partakes the contract work on his account under his own responsibility according to his own manner and
method, free from the control and direction of his employer or principal in all matters connected with the performance of
his work except as to the results thereof; (b) the contractor has substantial capital or investment; and (c) the agreement
between the principal and the contractor or subcontractor assures the contractual employees entitlement to all labor and
occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social welfare
benefits.

First. PASAKA failed to prove that it has substantial capitalization or investment in the form of tools, equipment,
machineries, work premises, among others, to qualify as an independent contractor.

Second. PASAKA likewise did not carry out an independent business from NORKIS TRADING. While PASAKA was
issued its Certificate of Registration on July 18, 1991, all it could show to prove that it carried out an independent business
as a job contractor were the Project Contract dated January 2, 1998 with NORKIS TRADING, and the Project Contract
dated December 18, 1998 with NORKIS INTERNATIONAL.
Third. Private respondents performed activities directly related to the principal business of NORKIS TRADING. They
worked as welders and machine operators engaged in the production of steel crates which were sent to Japan for use as
containers of motorcycles that are then sent back to NORKIS TRADING. Private respondents functions therefore are
directly related and vital to NORKIS TRADINGs business of manufacturing of Yamaha motorcycles.

All the foregoing considerations affirm by more than substantial evidence that NORKIS TRADING and PASAKA
engaged in labor-only contracting.

82. Gallego vs Bayer Phils

Facts

Gallego was contracted in April 1992 by Bayer Philippines, Inc. as crop protection technician to promote and market
BAYER products under the supervision of Aristeo Filipino, to different municipalities in Panay Island. In 1996, his
employment with BAYER ended and he sought with another company. In 1997, he was re-employed by BAYER through
Product Image and Marketing Services, Inc. performing the same task of promoting BAYER products to farmers and
dealers in Panay Island solely for the benefit of BAYER.

Petitioner lodged a complaint for illegal dismissal against herein Bayer, Guillermo, Product Image, and Bergonia, with
claims for reinstatement, backwages and/or separation pay, unpaid wages, holiday pay, premium pay, service incentive
leave and allowances, damages and attorneys fees.

Respondents BAYER and Guillermo denied the existence of an employer-employee relationship. Respondents
PRODUCT IMAGE and Bergonia, admitted that petitioner was hired as an employee of PRODUCT IMAGE on a
contractual basis to promote and market BAYER products pursuant to the Contract of Promotional Services between it
and BAYER. They alleged that petitioner was a field worker with no fixed hours and worked under minimal supervision,
his performance gauged only by his accomplishment reports as certified to by BAYER acting as his de facto
supervisor; that petitioner was originally assigned to Iloilo but later transferred to Antique; that petitioner was not
dismissed, but went on official leave from January 23 to 31, 2002, and stopped reporting for work thereafter; and that
petitioner was supposed to have been reassigned to South Luzon effective March 15, 2002 in accordance with a personnel
reorganization program, but he likewise failed to report to his new work station.

The Labor Arbiter declared respondents guilty of illegal dismissal. Respondents appealed and the NLRC reversed the
Decision of the Labor Arbiter. Petitioners Motion for Reconsideration was denied. His appeal to the Court of Appeals
was dismissed for petitioners petition for failure to attach to it the complaint and the parties respective position papers
filed with the Labor Arbiter. His Motion for Reconsideration was denied.

Issue

Whether PRODUCT IMAGE is a labor-only contactor

Held

No. Product image is a legitimate job contractor. The DOLE certificate having been issued by a public officer, it carries
with it the presumption that it was issued in the regular performance of official duty. Independently of the DOLEs
Certification, among the circumstances that establish the status of PRODUCT IMAGE as a legitimate job contractor are:
(1) PRODUCT IMAGE had, during the period in question, a contract with BAYER for the promotion and marketing of
BAYER products; (2) PRODUCT IMAGE has an independent business and provides services nationwide to big
companies such as Ajinomoto Philippines and Procter and Gamble Corporation; and (3) PRODUCT IMAGEs total assets
from 1998 to 2000 amounted to 405,639, 559,897, and 644,728, respectively. PRODUCT IMAGE also posted a bond
in the amount of 100,000 to answer for any claim of its employees for unpaid wages and other benefits that may arise out
of the implementation of its contract with BAYER. PRODUCT IMAGE cannot thus be considered a labor-only
contractor.

83. COCA-COLA BOTTLERS PHILS., INC., vs. AGITO et al

Facts

The respondents are salesmen assigned at the Lagro Sales Office of Coca-Cola for a number of years but were not
regularized. Their employment was terminated without just cause and due process. They filed complaints against Coca-
Cola, Interserve, Peerless Integrated Services, Inc. Better Builders, Inc., and Excellent Partners, Inc. However, they failed
to state a reason for filing complaints against Interserve, Peerless, Better Builders and Excellent Partners.

Coca-Cola averred that the respondents were employees of Interserve who were tasked to perform contracted services in
accordance with the provision of the Contract of Services. The contract covering the period of April 1, 2002 to September
30, 2002 constituted legitimate job contracting.

To prove that Interserve is an independent contractor, Coca-Cola presented the following: (1) AOI of Interserve; (2)
Certificate of Registration of Interserve with BIR; (3) ITR with Audited Financial Statements of Interserve for 2001; and
(4) Certificate of Registration of Interserve as an independent contractor issued by DOLE.

As a result, Coca-Cola asserted that Agito, et al. were employees of Interserve since it was the latter which hired them, paid
their wages and supervised their work, as proven by: (1) PDFs are in the records of Interserve; (2) Contracts of Temporary
Employment with Interserve; and (3) payroll records of Interserve.

LA found for Coca-Cola and held that Interserve was a legitimate job contractor. The complaints against Peerless, Better
Building and Excellent Partners was dismissed for failure to pursue the case.

On appeal, NLRC affirmed LA's decision.

CA reversed the NLRC decision and ruled that Interserve was a labor-only contractor with insufficient capital and
investments for the services which it was contracted to perform. Additionally, CA determined that Coca-Cola had effective
control over the means and method of the respondents work as evidenced by the Daily Sales Monitoring Report, the
Conventional Route System Proposed Set-Up, and the memoranda issued by the supervisor of petitioner addressed to
workers. Respondents' tasks were directly related and necessary to the main business of Coca-Cola. Finally, certain
provisions of the Contract of Service between Coca-Cola and Interserve suggested that the latter's undertaking did not
involve a specific job but rather the supply of manpower.

Issue

Whether Interserve is a legitimate job contractor

Held

No. Interserve is not a legitimate job contractor.

A legitimate job contract, wherein an employer enters into a contract with a job contractor for the performance of the
formers work, is permitted by law. Thus, the employer-employee relationship between the job contractor and his employees
is maintained. In legitimate job contracting, the law creates an employer-employee relationship between the employer and
the contractors employees only for a limited purpose, i.e., to ensure that the employees are paid their wages. The employer
becomes jointly and severally liable with the job contractor only for the payment of the employees wages whenever the
contractor fails to pay the same. Other than that, the employer is not responsible for any claim made by the contractors
employees.30

On the other hand, labor-only contracting is an arrangement wherein the contractor merely acts as an agent in recruiting
and supplying the principal employer with workers for the purpose of circumventing labor law provisions setting down
the rights of employees. It is not condoned by law. A finding by the appropriate authorities that a contractor is a "labor-
only" contractor establishes an employer-employee relationship between the principal employer and the contractors
employees and the former becomes solidarily liable for all the rightful claims of the employees.

Article 106 of the Labor Code categorically states: "There is labor-only contracting where the person supplying workers
to an employee does not have substantial capital or investment in the form of tools, equipment, machineries, work premises,
among others, and the workers recruited and placed by such persons are performing activities which are directly related to
the principal business of such employer." Thus, performing activities directly related to the principal business of the
employer is only one of the two indicators that "labor-only" contracting exists; the other is lack of substantial capital or
investment.

Respondents worked for petitioner as salesmen, with the exception of respondent Gil Francisco whose job was designated
as leadman. In the Delivery Agreement32 between petitioner and TRMD Incorporated, it is stated that petitioner is
engaged in the manufacture, distribution and sale of softdrinks and other related products. The work of respondents,
constituting distribution and sale of Coca-Cola products, is clearly indispensable to the principal business of petitioner.
The repeated re-hiring of some of the respondents supports this finding.

As to the supposed substantial capital and investment required of an independent job contractor, petitioner calls the
attention of the Court to the authorized capital stock of Interserve amounting to 2,000,000.00.

This Court is unconvinced.

At the outset, the Court clarifies that although Interserve has an authorized capital stock amounting to 2,000,000.00, only
625,000.00 thereof was paid up as of 31 December 2001. The Court does not set an absolute figure for what it considers
substantial capital for an independent job contractor, but it measures the same against the type of work which the
contractor is obligated to perform for the principal. However, this is rendered impossible in this case since the Contract
between petitioner and Interserve does not even specify the work or the project that needs to be performed or completed
by the latters employees, and uses the dubious phrase "tasks and activities that are considered contractible under existing
laws and regulations." Even in its pleadings, petitioner carefully sidesteps identifying or describing the exact nature of the
services that Interserve was obligated to render to petitioner. The importance of identifying with particularity the work or
task which Interserve was supposed to accomplish for petitioner becomes even more evident, considering that the Articles
of Incorporation of Interserve states that its primary purpose is to operate, conduct, and maintain the business of janitorial
and allied services.39But respondents were hired as salesmen and leadman for petitioner. The Court cannot, under such
ambiguous circumstances, make a reasonable determination if Interserve had substantial capital or investment to
undertake the job it was contracting with petitioner.

84. ASIAN ALCOHOL CORPORATION vs. NLRC

Facts

The Parsons family, who originally owned the controlling stocks in Asian Alcohol, were driven by mounting business
losses to sell their majority rights to Prior Holdings, Inc. which took over its management and operation the following
month. Prior Holding implemented are organizational plan and other cost-saving measures. Some one hundred seventeen
(117) employees out of a total workforce of three hundred sixty (360) were separated. Seventy two (72) of them occupied
redundant positions that were abolished. Of these positions, twenty one (21) held by union members and fifty one (51) by
non-union members.

The six (6) private respondents are among those union members whose positions were abolished due to redundancy.
Private respondents Carias, Martinez, and Sendon were water pump tenders; Amacio was a machine shop mechanic;
Verayo was a briquetting plant operator while Tormo was a plant helper under him. They were all assigned at the Repair
and Maintenance Section of the Pulupandan plant.
In October 1992, they received individual notices of termination effective November 30, 1992. They were paid the
equivalent of one month salary for every year of service as separation pay, the money value of their unused sick, vacation,
emergency and seniority leave credits, thirteenth (13th) month pay for the year 1992, medicine allowance, tax refunds,
and goodwill cash bonuses for those with at least ten (10) years of service. All of them executed sworn releases, waivers
and quitclaims. Except for Verayo and Tormo, they all signed sworn statements of conformity to the company
retrenchment program. And except for Martinez, they all tendered letters of resignation.

The private respondents later filed complaints for illegal dismissal with the NLRC, alleging that Asian Alcohol used the
retrenchment program as a subterfuge for union busting and that they were singled out for separation by reason of their
active participation in the union. They also asseverated that Asian Alcohol was not bankrupt as it has engaged in an
aggressive scheme of contractual hiring.

The Labor Arbiter dismissed the complaints because the fact that respondent AAC incurred losses in its business
operations was not seriously challenged by the complainants. He also explained that retrenchment program of AAC also
affected the non-union members.

The Private respondents appealed to the NLRC which ruled in their favor. In its xplanation, NLRC stated: [that] the
respondent terminated complainants "to protect the company from future losses," does not create an impression of
imminent loss. The company at the time of retrenchment was not then in the state of business reverses. There is therefore
no reason to retrench. . . .

Issue

Whether the private respondents were illegally dismissed.

Held

No. under Article 283 of the Labor code, retrenchment and redundancy are just causes for the employer to terminate the
services of workers to preserve the viability of the business.

The requirements for valid retrenchment which must be proved by clear and convincing evidence are: (1) that the
retrenchment is reasonably necessary and likely to prevent business losses, which, if already incurred, are not merely de
minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively
and in good faith by the
employer; (2) that the employer served written notice both to the employees and to the Department of Labor and
Employment at least one month prior to the intend date of retrenchment; (3) that the employer pays the retrenched
employees separation pay equivalent to one month pay or at least 1/2 month pay for every year of service, whichever is
higher; (4) that the employer exercises its prerogative to retrench employees in good faith for the advancement of its
interest of its interest and not to defeat or circumvent the employees' right to security of tenure; and (5) that the employer
used fair and reasonable
criteria in ascertaining who would be dismissed and who would be retained among the employees, such as status (i.e.,
whether they are temporary, casual, regular or managerial employees), efficiency, seniority, physical fitness, age, and
financial hardship for certain workers.

In the instant case, private respondents never contested the veracity of the audited financial documents proffered by Asian
Alcohol before the Executive Labor Arbiter. Neither did they object to their admissibility. They show that petitioner has
accumulated losses amounting to P306,764,349.00 and showing nary a sign of abating in the near future. The allegation of
union busting is bereft of proof. Union and non-union members were treated alike. The records show that the positions of
fifty one (51) other non-union members were abolished due to business losses.

In rejecting petitioner's claim of business losses, the NLRC stated that "the alleged deficits, of the corporation did not
prove anything for the [petitioner]" since they were incurred before the take over of Prior Holdings. Theorizing that proof
of losses before the take over is no proof of losses after the take over, it faulted Asian Alcohol for retrenching private
respondents on the ground of mere "possible future losses."
We do not agree. It should be observed that Article 283 of the Labor Code uses the phrase "retrenchment to prevent
losses". In its ordinary connotation, this phrase means that retrenchment must be undertaken by the employer before losses
are actually sustained. We have, however, interpreted the law to mean that the employer need not keep all his employees
until after his losses shall have materialized. Otherwise, the law could be vulnerable of attack as undue taking of property
for the benefit of another.

Part IV. JOB CONTRACTING AND LABOR ONLY CONTRACTING / 2. JOB CONTRACTOR.

CASE DIGEST

85. Serrano VS. NLRC Jan. 2000

FACTS:

Serrano was a regular employee of Isetann Department Store as the head of Security Checker. In 1991, as a cost-
cutting measure, Isetann phased out its entire security section and engaged the services of an independent security
agency.
Petitioner filed a complaint for illegal dismissal among others.
Labor arbiter ruled in his favor as Isetann failed to establish that it had retrenched its security section to prevent or
minimize losses to its business; that private respondent failed to accord due process to petitioner; that private
respondent failed to use reasonable standards in selecting employees whose employment would be terminated.
NLRC reversed the decision and ordered petitioner to be given separation pay.

ISSUE:

Whether or not the hiring of an independent security agency by the private respondent to replace its current security
section a valid ground for the dismissal of the employees classed under the latter.

RULING:

An employers good faith in implementing a redundancy program is not necessarily put in doubt by the availment
of the services of an independent contractor to replace the services of the terminated employees to promote economy
and efficiency. Absent proof that management acted in a malicious or arbitrary manner, the Court will not interfere
with the exercise of judgment by an employer.

If termination of employment is not for any of the cause provided by law, it is illegal and the employee should be
reinstated and paid backwages. To contend that even if the termination is for a just cause, the employee concerned
should be reinstated and paid backwages would be to amend Art 279 by adding another ground for considering
dismissal illegal.

If it is shown that the employee was dismissed for any of the causes mentioned in Art 282, the in accordance with
that article, he should not be reinstated but must be paid backwages from the time his employment was terminated
until it is determined that the termination of employment is for a just cause because the failure to hear him before
he is dismissed renders the termination without legal

86. Meralco VS Quisimbing Feb. 2000

FACTS:

Members of the Private respondent union were dissatisfied with the terms of a CBA with petitioner. The parties in this case
were ordered by the Sec. of Labor to execute a collective bargaining agreement (CBA) wherein.The CBA allowed for the
increase in the wages of the employees concerned. The petitioner argues that if such increase were allowed, it would pass
off such to the consumers.

ISSUE: W/N matters of salary are part of management prerogative

RULING:

Yes. There is no need to consult the Secretary of Labor in cases involving contracting out for 6 months or more as it is part
of management prerogative. However, a line must be drawn with respect to management prerogatives on business
operations per se and those which affect the rights of the workers. Employers must see to it that that employees are properly
informed of its decisions to attain harmonious labor relations and enlighten the worker as to their rights.

The contracting out business or services is an exercise of business judgment if it is for the promotion of efficiency and
attainment of economy. Management must be motivated by good faith and contracting out should not be done to circumvent
the law. Provided there was no malice or that it was not done arbitrarily, the courts will not interfere with the exercise of
this judgment.

87. Aliviado vs. Procter and Gamble

FACTS:

Petitioners worked as merchandisers of P&G. They all individually signed employment contracts with either Promm-Gem
or SAPS. They were assigned at different outlets, supermarkets and stores where they handled all the products of P&G.
They received their wages from Promm-Gem or SAPS.

SAPS and Promm-Gem imposed disciplinary measures on erring merchandisers for reasons such as habitual absenteeism,
dishonesty or changing day-off without prior notice.
To enhance consumer awareness and acceptance of the products, P&G entered into contracts with Promm-Gem and SAPS
for the promotion and merchandising of its products.
In December 1991, petitioners filed a complaint against P&G for regularization, service incentive leave pay and other
benefits with damages.

ISSUE: WON P&G is the employer of petitioners.

RULING:
In order to resolve the issue of whether P&G is the employer of petitioners, it is necessary to first determine whether Promm-
Gem and SAPS are labor-only contractors or legitimate job contractors

Clearly, the law and its implementing rules allow contracting arrangements for the performance of specific jobs, works or
services. However, in order for such outsourcing to be valid, it must be made to an independent contractor because the
current labor rules expressly prohibit labor-only contracting.
To emphasize, there is labor-only contracting when the contractor or sub-contractor merely recruits, supplies or places
workers to perform a job, work or service for a principal and any of the following elements are present:
1. i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or
service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are
performing activities which are directly related to the main business of the principal; or
1. ii) The contractor does not exercise the right to control over the performance of the work of the contractual
Under the circumstances, Promm-Gem cannot be considered as a labor-only contractor. We find that it is a legitimate
independent contractor.
Considering that SAPS has no substantial capital or investment and the workers it recruited are performing activities which
are directly related to the principal business of P&G, we find that the former is engaged in labor-only contracting.
Where labor-only contracting exists, the Labor Code itself establishes an employer-employee relationship between the
employer and the employees of the labor-only contractor. The statute establishes this relationship for a comprehensive
purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer
and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed
by the principal employer.
Petition Granted

NOTE:

1. Respondent filed MR, which was denied.

2. In its resolution, the Court upheld its decision declaring SAPS has no substantial capital, therefore, labor-only
contractor.

88. Emmanuel Babas VS Lorenzo Shipping Corp.

FACTS:

Lorenzo Shipping Corporation (LSC) is a duly organized domestic corporation engaged in the shipping industry. LSC
entered into a General Equipment Maintenance Repair and Management Services Agreement (Agreement) with Best
Manpower Services, Inc. (BMSI). Under the Agreement, BMSI undertook to provide maintenance and repair services to
LSCs container vans, heavy equipment, trailer chassis, and generator sets. BMSI further undertook to provide checkers to
inspect all containers received for loading to and/or unloading from its vessels.

Simultaneous with the execution of the Agreement, LSC leased its equipment, tools, and tractors to BMSI. The period of
lease was coterminous with the Agreement.
BMSI then hired petitioners on various dates to work at LSC as checkers, welders, utility men, clerks, forklift operators,
motor pool and machine shop workers, technicians, trailer drivers, and mechanics.

In September 2003, petitioners filed with the Labor Arbiter (LA) a complaint for regularization against LSC and BMSI. On
October 1, 2003, LSC terminated the Agreement, effective October 31, 2003. Consequently, petitioners lost their
employment.

BMSI asserted that it is an independent contractor. It averred that it was willing to regularize petitioners; however, some
of them lacked the requisite qualifications for the job. LSC averred that petitioners were employees of BMSI and were
assigned to LSC by virtue of the Agreement. BMSI is an independent job contractor with substantial capital or investment
in the form of tools, equipment, and machinery necessary in the conduct of its business. The Agreement between LSC and
BMSI constituted legitimate job contracting. Thus, petitioners were employees of BMSI and not of LSC.

The Labor Arbiter dismissed petitioners complaint on the ground that petitioners were employees of BMSI. It was BMSI
which hired petitioners, paid their wages, and exercised control over them. The NLRC reversed the Labor Arbiter

ISSUE:

Whether or not respondent was engaged in labor-only contracting

RULING:

Yes. In De Los Santos v. NLRC, the character of the business, i.e., whether as labor-only contractor or as job contractor,
should be measured in terms of, and determined by, the criteria set by statute. The parties cannot dictate by the mere
expedience of a unilateral declaration in a contract the character of their business.

The Court has observed that:

First, petitioners worked at LSCs premises, and nowhere else. Other than the provisions of the Agreement, there was no
showing that it was BMSI which established petitioners working procedure and methods, which supervised petitioners in
their work, or which evaluated the same. There was absolute lack of evidence that BMSI exercised control over them or
their work.

Second, LSC was unable to present proof that BMSI had substantial capital. There was no proof pertaining to the
contractors capitalization, nor to its investment in tools, equipment, or implements actually used in the performance or
completion of the job, work, or service that it was contracted to render. What is clear was that the equipment used by BMSI
were owned by, and merely rented from, LSC.
 Third, petitioners performed activities which were directly related to the main business of LSC. The work of
petitioners as checkers, welders, utility men, drivers, and mechanics could only be characterized as part of, or at least clearly
related to, and in the pursuit of, LSCs business.

Lastly, BMSI had no other client except for LSC, and neither BMSI nor LSC refuted this finding, thereby bolstering the
NLRC finding that BMSI is a labor-only contractor.

The CA erred in considering BMSIs Certificate of Registration as sufficient proof that it is an independent
contractor. Jurisprudence states that a Certificate of Registration issued by the Department of Labor and Employment is
not conclusive evidence of such status. The fact of registration simply prevents the legal presumption of being a mere labor-
only contractor from arising.

*LSC is ordered to reinstate the petitioners to their former positions. Petitioners are declared as regular employees of LSC.

89. Manila Water Co. Inc. VS Jose Dalumpines, et al.

FACTS:

Petitioner Manila Water Company, Inc. (Manila Water) was one of two private concessionaires contracted by the MWSS
to manage the water distribution system in the east zone of Metro Manila.

Under the concession agreement, Manila Water undertook to absorb the regular employees of MWSS listed by the latter
effective August 1, 1997. Individual respondents, with the exception of Moises Zapatero (Zapatero) and Edgar Pamoraga
(Pamoraga), were among the one hundred twenty-one (121) employees not included in the list of employees to be absorbed
by Manila Water. Nevertheless, Manila Water engaged their services without written contract from August 1, 1997 to
August 31, 1997. On September 1, 1997, individual respondents signed a three (3)-month contract to perform collection
services on commission basis for Manila Waters branches in the east zone.

Before the expiration of the contract of services, the 121 bill collectors formed a corporation duly registered with the
Securities and Exchange Commission (SEC) as the "Association Collectors Group, Inc." (ACGI). ACGI was one of the
entities engaged by Manila Water for its courier service. Manila Water entered into a service agreement with respondent
First Classic Courier Services, Inc. (FCCSI) also for its courier needs. The service agreements between Manila Water and
FCCSI covered the periods 1997 to 1999 and 2000 to 2002. FCCSI gave a deadline for the bill collectors who were members
of ACGI to submit applications and letters of intent to transfer to FCCSI. The individual respondents in this case were
among the bill collectors who joined FCCSI and were hired effective December 1, 1997.
On various dates between May and October 2002, individual respondents were terminated from employment. Manila Water
no longer renewed its contract with FCCSI because it decided to implement a "collectorless" scheme whereby Manila Water
customers would instead remit payments through "Bayad Centers." Thus, aggrieved bill collectors individually filed
complaints for illegal dismissal, unfair labor practice, damages, and attorneys fees, with prayer for reinstatement and
backwages against petitioner Manila Water and respondent FCCSI.

The LA rendered a decision dismissing the complaint for lack of employer-employee relationship. Respondent bill collectors
filed an appeal to the NLRC but the same was denied. Respondents filed a petition for certiorari to the CA which reversed
the decision of the NLRC. Petitioners filed a motion for reconsideration but the same was denied. Hence, this petition.

ISSUE:

Is there employer-employee relationship between respondent bill collectors and petitioner Manila Water?

RULING:

Job contracting is permissible only if the following conditions are met:

[1] The contractor carries on an independent business and undertakes the contract work on his own account under his own
responsibility according to his own manner and method, free from the control and direction of his employer or principal in
all matters connected with the performance of the work except as to the results thereof; and,

[2] The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and
other materials which are necessary in the conduct of the business.

Article 106 of the Code provides that there is labor-only contracting where the person supplying workers to an employer
does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others,
and the workers recruited and placed by such person are performing activities which are directly related to the principal
business of the employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer
who shall be responsible to the workers in the same manner and to the same extent as if the latter were directly employed
by him.

In the instant case, the CA found that FCCSI is a labor-only contractor. Based on the factual findings of the CA, FCCSI
does not have substantial capital or investment to qualify as an independent contractor. FCCSI was incorporated on
November 14, 1995, with an authorized capital stock ofP400,000.00, of which onlyP100,000.00 is actually paid-in. Going
by the pronouncement in Pe, such capitalization can hardly be considered substantial.

As correctly ruled by the CA, FCCSIs capitalization may not be considered substantial considering that it had close to a
hundred collectors covering the east zone service area of Manila Water customers. The allegation in the position paper of
FCCSI that it serves other companies courier needs does not "cure" the fact that it has insufficient capitalization to qualify
as independent contractor. Neither did FCCSI prove its allegation by substantial evidence other than by their self-serving
declarations. What is evident is that it was Manila Water that provided the equipment and service vehicles needed in the
performance of the contracted service, even if the contract between FCCSI and Manila Water stated that it was the
Contractor which shall furnish at its own expense all materials, tools, and equipment needed to perform the tasks of
collectors.

The elements to determine the existence of an employment relationship are:

(a) the selection and engagement of the employee;

(b) the payment of wages;

(c) the power of dismissal; and,

(d) the employer's power to control the employee's conduct.

The most important of these elements is the employer's control of the employee's conduct, not only as to the result of the
work to be done, but also as to the means and methods to accomplish it.

First, respondent bill collectors were individually hired by the contractor, but were under the direct control and supervision
of the concessionaire. Second, they performed the same function of courier and bill collection services. Third, the element
of control exercised by Manila Water over respondent bill collectors is manifested in the following circumstances:

(a) respondent bill collectors reported daily to the branch offices of Manila Water to remit their collections with the specified
monthly targets and comply with the collection reporting procedures prescribed by the latter;

(b) respondent bill collectors, except for Pamoraga and Zapatero, were among the 121 collectors who incorporated ACGI;

(c) Manila Water continued to pay their wages in the form of commissions even after the employees alleged transfer to
FCCSI. Manila Water paid the respondent bill collectors their individual commissions, and the lump sum paid by Manila
Water to FCCSI merely represented the agency fee; and

(d) the certification or individual clearances issued by Manila Water to respondent bill collectors upon the termination of
the service contract with FCCSI.

The certification stated that respondents were contract collectors of Manila Water and not of FCCSI. Thus, this Court agrees
with the findings of the CA that if, indeed, FCCSI was the true employer of the bill collectors, it should have been the one
to issue the certification or individual clearances.

DENIED.

90. Spic N Span Services VS G. Paje, et al. Aug. 1998

Labor Law Labor Standards Primacy of the Constitutional Right of Security of Tenure Over Procedural Rights in Labor
Cases
FACTS:
In February 1998, Gloria Paje and 10 others were dismissed as sales girls (promo girls) of Swift Corporation. Paje et al
were provided to Swift by Spic N Span Services Corporation. Paje et al, through their non-lawyer representative, Florencio
Peralta, filed a labor case for illegal dismissal against Swift and Spic N Span. Paje et al won. Swift and Spic N Span
appealed the case to the NLRC. The NLRC affirmed the Labor Arbiter. The Court of Appeals likewise ruled in favor of
Paje et al. Spic N Span and Swift further appealed to the SC where they alleged that there are two procedural infirmities
on the part of Paje et al. First was the fact that not all of them (Paje et al) signed the pleadings signed before the NLRC, and
second, that Paje et al were represented by a non-lawyer (Peralta); that under the law, in labor cases, there are only two
instances where a non-lawyer may appear or represent a litigant before the labor arbiter or the NLRC, to wit: (1) If they
represent themselves; or (2) If they represent their organization or members thereof. Neither can be said of Peralta.

ISSUE: Whether or not such procedural lapse on the part of Paje et al is sufficient for the dismissal of their complaint
against Spic N Span and Swift.

RULING:
No. In the hierarchy observed in the dispensation of justice, rules of procedure can be disregarded in order to serve the ends
of justice. Certain labor rights assume preferred positions in our legal hierarchy. Under the Constitution and the Labor Code,
the State is bound to protect labor and assure the rights of workers to security of tenure. The State is bound to protect the
rights of workers and promote their welfare, and the workers are entitled to security of tenure, humane conditions of work,
and a living wage. Under these fundamental guidelines, Paje et als right to security of tenure is a preferred constitutional
right that technical infirmities in labor pleadings cannot defeat. The Supreme Court also noted that even if not all of the
complainants signed the pleadings, it is sufficient that some of them have signed it. The lack of a verification in a pleading
is only a formal defect, not a jurisdictional defect, and is not necessarily fatal to a case. The primary reason for requiring a
verification is simply to ensure that the allegations in the pleading are done in good faith, are true and correct, and are not
mere speculations.

91. COCA-COLA BOTTLERS PHIL., INC. VS. HINGPIT

FACTS:
 Pioneer Multi-Services Co (PIONEER) and Lipercon Services, Inc (LIPERCON) are manning companies with
which Coca-Cola successively entered into contracts for the supply of manpower needs of its plant in Tagbilaran.
Coca-Colas contract with Pioneer was executed on May 28, 1983 and that with Lipercon, 5 years later, on
December 17, 1988.
11 persons were claiming they were employees of Coca-Cola in its Tagbilaran City Plant. They filed a complaint
against Coca-Cola with the Regional Arbitration Board of the National Labor Relations Commission in Cebu City.
In the decision of the RAB, it was found that the complainants were supplied as workers to Coca-Cola first by
Pioneer and later by Lipercon. When Lipercon entered into the picture, the complainants were already regular
employees of Coca-Cola. This is because while Lipercon was an independent contractor, its predecessor Pioneer
was not.
The Commission revered the Labor Arbiters conclusion that Lipercon was an independent labor contractor. It
declared it instead to be a mere labor-only contractor.

ISSUE: Whether or not Lipercon is a labor only contractor.

RULING:

The SC held in the negative. The NLRC grounded its decision solely on an earlier case where the court held Lipercon to a
be a Labor only contractor because it failed to prove that it has substantial capital, investment, tools, etc.

It is not so in the present case. Here, there is substantial evidence detailed by the labor arbiter, to establish Lipercons
character as an independent contractor in the real sense of the word. The Labor Arbiters ruling is therefore more acceptable
that that of the Commission because its decision was founded solely on an inapplicable precedent. Lipercon proved to be
an independent contractor. Aside from hiring its own employees and paying the workers their salaries, it also exercised
supervision and control over them which is the most important aspect in determining employer-employee relations. That
indeed has substantial capital is proven by the fact that it did not depend upon its billing on respondent regarding payment
of workers salaries. And when complainants were separated from Lipercon, they singed quitclaim and release documents

92. Insular Life Assurance Co., Ltd vs. NLRC, G.R. No. 119930, 12 March 1998

FACTS: Insular Life entered into an agency contract with respondent Pantaleon de los Reyes authorizing the latter to solicit
applications for life insurance for which he would be paid compensation in the form of commissions. The contract contained
the stipulation that no employer-employee relationship shall be created between the parties and that the agent shall be free
to exercise his own judgment as to time, place and means of soliciting insurance. Sometime after, the parties entered into
another contract where Pantaleon was appointed as Acting Unit Manager responsible for recruitment, training, organization,
development and furtherance of the agencys goals. He was prohibited from working for other life insurance companies or
with the government. Pantaleon worked concurrently as agent and Acting Unit Manager until he was notified of his
termination. He thus filed a complaint for illegal dismissal before the Labor Arbiter. The Labor Arbiter dismissed the
complaint but on appeal was reversed by the NLRC tribunal ruling that Pantaleon was an employee of petitioner. Petitioner
contends that nature of the work has already been resolved by the Court in the earlier case of Insular Life v. Basiao where
Basiao is declared an independent contractor and not an employee of petitioner.

Issue: Whether or not there exists employer-employee relationship between petitioner and Pantaleon.

HELD: YES. It is axiomatic that the existence of an employeremployee relationship cannot be negated by expressly
repudiating it in the management contract and providing therein that the employee is an independent contractor when the
terms of the agreement clearly show otherwise. For, the employment status of a person is defined and prescribed by law and
not by what the parties say it should be. In determining the status of the management contract, the four-fold test on
employment earlier mentioned has to be applied.

Exclusivity of service, control of assignments and removal of agents under private respondents unit, collection of
premiums, furnishing of company facilities and materials as well as capital described as Unit Development Fund are but
hallmarks of the management system in which herein private respondent worked. This obtaining, there is no escaping the
conclusion that private respondent Pantaleon de los Reyes was an employee of herein petitioner.

93. Philippine Fisheries Development Authority vs. NLRC, G.R. No. 94825, 4 September 1992

FACTS: Petitioner is a government-owned or controlled corporation. It entered into a contract with the Odin Security
Agency for security services of its Iloilo Fishing Port Complex in Iloilo City. The contract for security services provided
for a one year renewable period unless terminated by either of the parties. During the effectivity of the said Security
Agreement, private respondent requested the petitioner to adjust the contract rate in view of the implementation of Wage
Order No. 6 but the same was ignored by the petitioner. private respondent filed with the Office of the Sub-Regional
Arbitrator in Region VI, Iloilo City a complaint for unpaid amount of re-adjustment rate under Wage Order No. 6 together
with wage salary differentials arising from the integration of the cost of living allowance under Wage Order No. 1, 2, 3 and
5 pursuant to EO No. 178 plus the amount of P25,000.00 as attorneys fees and cost of litigation. Petitioner filed a Motion
to Dismiss on the ff. ground: The Commission has no jurisdiction to hear and try the case; xxx the Labor Arbiter issued an
Order dismissing the complaint stating that the petitioners being a government-owned or controlled corporation would
place it under the scope and jurisdiction of the Civil Service Commission and not within the ambit of the NLRC

ISSUE: Whether or not NLRC has jurisdiction over the case.

HELD: The petitioner is a government-owned or controlled corporation with a special charter. This places it under the scope
of the civil service (Art. XI [B] [1] and [2], 1987 Constitution); Boy Scouts of the Philippines v. NLRC, 196 SCRA 176
[1991]; PNOC-Energy Development Corp. v. NLRC, 201 SCRA 487 [1991]). However, the guards are not employees of
the petitioner. The contract of services explicitly states that the security guards are not considered employees of the petitioner
(Rollo, p. 45). There being no employer-employee relationship between the petitioner and the security guards, the
jurisdiction of the Civil Service Commission may not be invoked in this case.

94. Tabas, et al. vs California Manufacturing Co., Inc. et. al., G. R. No. 80680, 26 January 1989

Facts: Petitioners filed a petition in the NLRC for reinstatement and payment of various benefits against California
Manufacturing Company. The respondent company then denied the existence of an employer-employee relationship
between the company and the petitioners. Pursuant to a manpower supply agreement, it appears that the petitioners prior
their involvement with California Manufacturing Company were employees of Livi Manpower service, an independent
contractor, which assigned them to work as promotional merchandisers. The agreement provides that: California has no
control or supervisions whatsoever over [Livis] workers with respect to how they accomplish their work or perform
[Californias] obligation It was further expressly stipulated that the assignment of workers to California shall be on a
seasonal and contractual basis; that [c]ost of living allowance and the 10 legal holidays will be charged directly to
[California] at cost ; and that [p]ayroll for the preceding [sic] week [shall] be delivered by [Livi] at [Californias]
premises.

Issue: WON principal employer is liable.

Held: Yes. The existence of an employer-employee relation cannot be made the subject of an agreement. Based on Article
106, labor-only contractor is considered merely as an agent of the employer, and the liability must be shouldered by either
one or shared by both.

There is no doubt that in the case at bar, Livi performs manpower services, meaning to say, it contracts out labor in favor
of clients. We hold that it is one notwithstanding its vehement claims to the contrary, and notwithstanding the provision of
the contract that it is an independent contractor. The nature of ones business is not determined by self-serving
appellations one attaches thereto but by the tests provided by statute and prevailing case law. The bare fact that Livi
maintains a separate line of business does not extinguish the equal fact that it has provided California with workers to pursue
the latters own business. In this connection, we do not agree that the petitioners had been made to perform activities which
are not directly related to the general business of manufacturing, Californias purported principal operation activity.
Livi, as a placement agency, had simply supplied California with the manpower necessary to carry out its (Californias)
merchandising activities, using its (Californias) premises and equipment.

95. Philippine Bank of Communications vs. NLRC, G.R. No. L-66598, 19 December 1986

FACTS: Philippine Bank of Communications and the Corporate Executive Search Inc. (CESI) entered into a letter
agreement dated January 1976 under which (CESI) undertook to provide "Temporary Services" to petitioner consisting of
the "temporary services" of eleven (11) messengers. The contract period is described as being "from January 1976." The
petitioner in truth undertook to pay a "daily service rate of P18, " on a per person basis. Ricardo Orpiada was thus assigned
to work with the petitioner bank. As such, he rendered services to the bank, within the premises of the bank and alongside
other people also rendering services to the bank. There was some question as to when Ricardo Orpiada commenced
rendering services to the bank. On or about October 1976, the petitioner requested (CESI) to withdraw Orpiada's assignment
because, in the allegation of the bank, Orpiada's services "were no longer needed."Orpiada instituted a complaint in the
Department of Labor against the petitioner for illegal dismissal and failure to pay the 13th month pay provided for in
Presidential Decree No. 851. The Regional Office of the Department of Labor issued an order dismissing Orpiada's
complaint for failure of the latter to show the existence of an employer-employee relationship between the bank and himself.
The Labor Arbiter Dogelio rendered a decision ordering the reinstatement of complainant to the same or equivalent position
with full back wages and to pay the latter's 13th month pay for the year 1976.On 26 October 1977, the bank appealed the
decision of the Labor Arbiter to the respondent NLRC. NLRC promulgated its decision affirming the award of the Labor
Arbiter.

ISSUE: W/N an ER-EE relationship existed between the bank and respondent

HELD: Yes. In the case at bar, Orpiada is not previously selected by the bank but was assigned to work by CESI.
Theselection of Orpiada by CESI, was however subject to the acceptance of the bank.With respect to the payment of
Orpiadas wages, the bank remitted to CESI the daily rate or Orpiada and CESI pays the latter his wages. He was also listed
in the payroll of CESI with SSS deduction. In respect of the power of dismissal, the bank requested CESI to withdraw
Orpiadas assignment, which resulted to the latters termination. With regards to power of control, Orpiada performed his
functions within the banks premises and not in CESA/Payment of wages and power of dismissal exist between CESI and
Orpiada. However, selection and control exist between Orpiada and the bank. Thus, it is necessary to determine the
relationship between the bank and CESI, whether the latter is a job (independent) contactor or a labor-only contracting. In
the present case, the undertaking of CESI in favor of the bank was not the performance of a specific job, but to produce its
client the bank with a certain number of persons to work as messengers. Thus, Orpiada utilized the premises and office
equipment of the bank and not of CESI. Orpiada worked in the bank for a period of 16 months. Under the Labor Code, any
employee who has rendered at least 1 year, whether continuous or not, shall be considered as a regular employee. Therefore,
CESI was only engaged in a labor-only contracting with petitioner and Orpiada. As a result, petitioner is liable to Opiada
as if Opiada had been directly employer by the bank.

96. La Suerte Cigar and Cigarette Factory vs. Director of the BLR et. al., G.R. No. L-55674, 25 July 1983

FACTS: La Suerte Cigar and Cigarette Factory Provincial(the Company) and Metro Manila Sales Force Association (the
local union) applied for and was granted chapter status by the National Association of Trade Unions (NATU).Sometime
later, 31 local union members signed a joint letter withdrawing their membership in NATU. The local union and NATU
filed a petition for certification election which alleged that 48 of the60 sales personnel of the company were members of the
local union. The petition is supported by no less than 75% of the sales force. Moreover, there is no existing recognized labor
union in the company representing the said sales personnel. Likewise, there is no existing CBA and no certification election
in the last 12months preceding the filing of the petition. The company opposed on the ground that it was not supported by
at least 30% (now25%) of the proposed bargaining unit because:
 (a) of the alleged 48 members of the local union, 31 had withdrawn prior to the filing of the petition, and (b) 14 of the
alleged members of the union were not employees of the company but were independent contractors. The BLR
(Bureau of Labor Relations) director denied the companys objection.

It is the contention of the company that the dealers in the sale of its tobacco products are independent contractors. On the
other hand, the Union contends that such dealers are actually employees entitled to the coverage and benefits of labor
relations laws.

Issue: W/N the respondents are employees or independent contractors.

Held: SC held that 14 members of the respondent local union are dealers and independent.

In the Shriro case, the common law rule of determining the existence of employer-employee relationship, principally the
control test, applies in this jurisdiction. Where the element of control is absent; where a person who works for another
does so more or less at his own pleasure and is not subject to definite hours or conditions of work, and in turn is compensated
according to the result of his efforts and not the amount thereof, relationship of employer and employee does not exist.

A basic factor underlying the exercise of rights under the Labor Code is status of employment. The question of whether
employer-employee relationship exists is a primordial consideration before extending labor benefits under the workmens
compensation, social security, medicare, termination pay and labor relations law. It is important in the determination of who
shall be included in a proposed bargaining unit because it is the sine qua non, the fundamental and essential condition that
a bargaining unit be composed of employees. Failure to establish this juridical relationship between the union members and
the employer affects the legality of the union itself. It means the ineligibility of the union members to present a petition for
certification election as well as to vote therein. Corollarily, when a petition for certification election is supported by 48
signatories in a bargaining unit composed of 60 salesmen, but 14 of the 48 lacks employee status, the petition is vitiated
thereby. Herein lies the importance of resolving the status of the dealers in this case.

97. Insular Life Insurance Co. Ltd. vs. NLRC, G.R. No. 84484, 15 November 1989

FACTS: Petitioner Insular Life entered into a contract with respondent Basiao where the latter is authorized to solicit for
insurance policies. Sometime later, the parties entered into another contract which caused Basiao to organize an agency in
order to fulfill its terms. The contract being subsequently terminated by petitioner, Basiao sued the latter which prompted
also for the termination of their engagement under the first contract. Basiao thus filed before the Ministry of Labor seeking
to recover alleged unpaid commissions. Petitioner contends that Basiao is not an employee but an independent contractor
for which they have no obligation to pay said commissions. The Labor Arbiter found for Basiao ruling that there exists
employer-employee relationship between him and petitioner. NLRC affirmed.

Issue: Whether or not employer-employee relationship existed between petitioner and Basiao.

HELD: NO. In determining the existence of employer-employee relationship, the following elements are generally
considered, namely: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal;
and (4) the power to control the employees conduct although the latter is the most important element. It should, however,
be obvious that not every form of control that the hiring party reserves to himself over the conduct of the party hired in
relation to the services rendered may be accorded the effect of establishing an employer-employee relationship between
them in the legal or technical sense of the term.

Rules and regulations governing the conduct of the business are provided for in the Insurance Code and enforced by the
Insurance Commissioner. It is, therefore, usual and expected for an insurance company to promulgate a set of rules to guide
its commission agents in selling its policies that they may not run afoul of the law and what it requires or prohibits. None
of these really invades the agents contractual prerogative to adopt his own selling methods or to sell insurance at his own
time and convenience, hence cannot justifiably be said to establish an employer-employee relationship between him and the
company.
The Court, therefore, rules that under the contract invoked by him, Basiao was not an employee of the petitioner, but a
commission agent, an independent contractor whose claim for unpaid commissions should have been litigated in an ordinary
civil action.

98. Petrophil Corporation vs. NLRC, G.R. No. L-64048, 29 August 1986

FACTS: Private respondent, Anselmo B. Encarnacion, had been working as a casual employee of various job contractors
in Petrophil's premises since 1963 when the firm was still under the ownership and management of Esso Standard
Philippines. On December 21, 1973, Esso Standard Philippines was sold to Petrophil Corporation. At that time, Anselmo
B. Encarnacion was working at the bulk plant as an employee of one Juanito Campos who had a job contract with Esso
Standard Philippines. The said job contract was continued by Petrophil Corporation so respondent Encarnacion remained
working at the bulk plant. Respondent Gersher Engineering Works entered into a service contract with Petrophil and
thereafter placed respondent Encarnacion in its payroll. Gersher received a letter from Petrophil complaining about the
unsatisfactory performance of Encarnacion. Gersher decided to re-assign Encarnacion to Caltex Phil. Inc. Encarnacion
refused to be reassigned to Caltex unless he was made to occupy the same position of warehouseman as in Petrophil
Corporation and since the position available at Caltex was that of equipment maintainer, respondent Encarnacion refused
to be transferred. Instead he filed a complaint for illegal dismissal against respondent Gersher and in the alternative, against
petitioner Petrophil Corporation, before the Labor Relations Division of the then Department of Labor.

ISSUE: W/N Encarnacion was the employee of Petrophil Corporation and not Gersher

HELD: Encarnacion was the employee of respondent Gersher and not petitioner Petrophil Corporation. This fact was
admitted by no less than Gersher in its position paper which it filed with the Labor Relations Division of the then Department
of Labor. x x x The payrolls of respondent Gersher also show that respondent Encarnacion was its employee. For the period
from March 15, 1976 and continuously up to March 31, 1977, respondent Encarnacion was receiving his salary from
respondent Gersher. There was never an instance during this period that Encarnacion received his salary from Petrophil
Corporation.

Part IV: Job Contracting & Labor only contracting

C. Independent Contractors

99: Rhone-poulenc Agrochemicals Philippines, Inc. vs NLRC

Petitioner Rhone-Poulenc Agrochemicals Philippines, Inc. (Rhone-Poulenc for brevity) assails the finding by the National
Labor Relations Commission (NLRC) that Contemporary Services, Inc. (CSI), a supplier of janitorial services, is a labor-
only contractor.

Facts: The petitioner is a domestic corporation engaged in the manufacture of agro-chemicals. Its business operations
involve the formulation, production, distribution and sale in the local market of its agro-chemical products. On January 1,
1988, as a consequence of the sale by Union Carbide, Inc. of all its agricultural-chemical divisions worldwide in favor of
Rhone-Poulenc Agrochemie, France, the petitioner's mother corporation, the petitioner acquired from Union Carbide
Philippines Far East, Inc. (Union Carbide for short) the latter's agro-chemical formulation plant in Namayan, Mandaluyong,
Metro Manila.

Rhone-Poulenc and Union Carbide agreed on a three-month transition period for the turnover of the Namayan plant to the
former. Midway through the transition period, Union Carbide instructed CSI to reduce the number of janitors working at
the plant from eight (8) to seven (7). On April 1, 1988, the eight janitors reported for work at the Namayan plant but were
refused admission and were told that another group of janitors had replaced them. These janitors then filed separate
complaints for illegal dismissal, payment of 13th month salary, service leave and overtime pay against Union Carbide,
Rhone-Poulenc and CSI. Trial on the merits ensued wherein the labor arbiter conducted full-blown hearings on factual
issues. After the cases were submitted for decision, six of the original complainants tendered their resignations to CSI in
consideration of the latter's settlement of all their claims. Hence, only the claims of respondents Roman and Orain remained
unsettled.

On November 8, 1989, Labor Arbiter Asuncion ruled that CSI is a legitimate service contractor and that Roman and Orain
were employees of CSI. The NLRC then ordered the petitioner to reinstate respondents Roman and Orain and to pay one
year backwages, or to grant them separation pay if reinstatement was not feasible. Petitioner Rhone-Poulenc maintains that
it is CSI, and not Union Carbide and Rhone-Poulenc, as successor, which is the actual employer of the respondent janitors.
Rhone-Poulenc insists that, contrary to the NLRC's findings, CSI is a legitimate independent contractor providing janitorial
services to a wide range of clientele including Union Carbide.

Issue: Whether or not CSI is engaged in labor-only contracting or in job contracting?

Held: In determining whether a contractor is engaged in labor-only contracting or in job contracting, reference may be
made to Sections 8 and 9 of the Implementing Rules, which provide:

Sec. 8. Job contracting. There is job contracting permissible under the Code if the following conditions
are met:

(1) The contractor carries on an independent business and undertakes the contract work on his own account
under his own responsibility according to his own manner and method, free from the control and direction
of his employer or principal in all matters connected with the performance of the work except as to the
results thereof; and

(2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work
premises, and other materials which are necessary in the conduct of his business.

Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shall
be deemed to be engaged in labor-only contracting where such person;

(1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work
premises and other materials; and

(2) The workers recruited and placed by such person are performing activities which are directly related to
the principal business or operations of the employer in which workers are habitually employed.

(b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall
be considered merely as an agent or intermediary of the employer who shall be responsible to the workers
in the same manner and extent as if the latter were directly employed by him.

Applying the foregoing principles to the case at bar, there is no employer-employee relationship between Union Carbide
and the respondent janitors. The respondents themselves admitted that they were selected and hired by CSI and were
assigned to Union Carbide. CSI likewise acknowledged that the two janitors were its employees. The janitors drew their
salaries from CSI and not from Union Carbide. CSI exercised control over these janitors through Richard Barroga, also a
CSI employee, who gave orders and instructions to CSI janitors assigned to the Namayan plant. Moreover, CSI had the
power to assign its janitors to various clients and to pull out, as it had done in a number of occasions, any of its janitors
working at Union Carbide.

As to whether CSI is engaged in labor-only contracting or job contracting, the Court find sufficient basis from the records
to conclude that CSI is engaged in job contracting as correctly declared by the Labor Arbiter.

100. Ushio Marketing vs. NLRC et. al., G.R. No. 124551, 28 August 1998.

Facts: Private respondent Severino Antonio was an electrician who worked within the premises of petitioner Ushio's car
accessory shop in Banawe, Quezon City. On August 22, 1994, private respondent filed a complaint for illegal dismissal,
non-payment of overtime pay, holiday pay, and other benefits against petitioner Ushio Marketing. Petitioner filed a motion
to dismiss, while private respondent failed to file his position paper. In Petitioner's Motion to Dismiss, she alleged that it
was a single proprietorship engaged in the business of selling automobile spare parts and accessories. Petitioner claimed
that private respondent was not among her employees but a free lance operator who waited on the shop's customers should
the latter require his services. On January 13, 1995, Labor Arbiter Facundo L. Leda premising on the allegations contained
in the Motion to Dismiss submitted by the petitioner Company, issued an order dismissing the complaint of private
respondent Severino Antonio against petitioner Ushio Marketing Corp.

On February 28, 1995, private respondent assisted by the Public Attorney's Office, appealed the order of the Honorable
Labor Arbiter to the Commission. In his memorandum, private respondent alleged that Ushio Marketing hired his services
on 15 November 1981 until July 3, 1994 as an electrician with a daily salary of one hundred thirty two pesos (P132.00) per
day.

On May 31, 1995, the National Labor Relations Commission issued its decision holding that complainant is respondent's
employee and that he was illegally dismissed.

Issue: whether or not Sevirino Antonio is an independent contractor

Held: Yes.

The Court supports the findings of the OSG that there was no employer-employee relationship between the parties because
the control test, being the most important element of an employer-employee relationship, was absent.

The factors to be considered in determining the existence of an employer-employee relationship are: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the
employee's conduct. The so-called "control test" is commonly regarded as the most crucial and determinative indicator of
the presence or absence of an employer-employee relationship. Under the control test, an employer-employee relationship
exists where the person for whom the services are performed reserves the right to control not only the end achieved, but
also the manner and means to be used in reaching that end.

First, private respondent contends that he worked as an electrician and personal assistant at
petitioner's store. As [an] electrician, private respondent may be presumed to have used equipment
or tools in rendering electrical services. If it is true that private respondent was an employee of
petitioner, he would have used equipment or tools supplied and owned by his employer. However,
private respondent failed to allege and present proof that petitioner supplied him equipment and
tools.

Second, the conduct of private respondent was not subject to the control and supervision of
petitioner or any of its personnel. There was no allegation of this, nor was evidence presented to
prove it other than the bare allegation of private respondent that he could not leave the work
premises without permission from petitioner. Private respondent himself decided how he would
render electrical services to customers. If it is true that private respondent was hired as [an]
electrician, petitioner would have exercised supervision and control over the, means and manner
he performed his electrical services for, otherwise, if private respondent's work was unsatisfactory,
it would reflect on the business of petitioner.

Third, private respondent was free to offer his services to other stores along Banaue, Quezon City,
as evidenced by the affidavit of Caroline Tan To, Assistant Manager of Share Motor Sales (Annex
B, Reply to Private Respondent's Comment dated August 5, 1996) and private respondent's own
admission. But although private respondent admits that he rendered electrical services to the
customers of other stores, he claims that petitioner allowed him to do so. If private respondent was
an employee of petitioner, it was unthinkable for petitioner to allow private respondent to render
electrical services to three other stores selling automobile spare parts and accessories who were its
competitors.
 Fourth, private respondent admits that it was Mrs. Tan who refers electrical and other jobs to private
respondent. If private respondent was an employee of petitioner, Tan could not have referred
electrical work directly to him. She would have to course job orders to petitioner. The fact that she
dealt directly with private respondent means that she did not consider private respondent an
employee of petitioner.

It is clear that petitioner did not have the power to control private respondent with respect to the means and methods by
which his work was to be accomplished. Thus, private respondent is considered as an independent contractor.

101. Marticio Semblante, et. al. vs. CA, et. al., G.R. No. 196426

Facts: Petitioners Marticio Semblante (Semblante) and Dubrick Pilar (Pilar) assert that they were hired by respondents-
spouses Vicente and Maria Luisa Loot, the owners of Gallera de Mandaue (the cockpit), as the official masiador and
sentenciador, respectively, of the cockpit sometime in 1993.

For their services as masiador and sentenciador, Semblante. They work every Tuesday, Wednesday, Saturday, and Sunday
every week, excluding monthly derbies and cockfights held on special holidays. Their working days start at 1:00 p.m. and
last until 12:00 midnight, or until the early hours of the morning depending on the needs of the cockpit. Petitioners had both
been issued employees identification cards5 that they wear every time they report for duty. They alleged never having
incurred any infraction and/or violation of the cockpit rules and regulations.

On November 14, 2003, however, petitioners were denied entry into the cockpit upon the instructions of respondents, and
were informed of the termination of their services effective that date. This prompted petitioners to file a complaint for illegal
dismissal against respondents.

In answer, respondents denied that petitioners were their employees and alleged that they were associates of respondents
independent contractor, Tomas Vega. Respondents claimed that petitioners have no regular working time or day and they
are free to decide for themselves whether to report for work or not on any cockfighting day. In times when there are few
cockfights in Gallera de Mandaue, petitioners go to other cockpits in the vicinity. Lastly, petitioners, so respondents assert,
were only issued identification cards to indicate that they were free from the normal entrance fee and to differentiate them
from the general public.

Issue: whether or not petitioners are independent contractors

Held: Yes. It is evident that petitioners are NOT employees of respondents, since their relationship fails to pass muster the
four-fold test of employment (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employees conduct, which is the most important element.

As found by both the NLRC and the CA, respondents had no part in petitioners selection and management; 19 petitioners
compensation was paid out of the arriba (which is a percentage deducted from the total bets), not by petitioners; and
petitioners performed their functions as masiador and sentenciador free from the direction and control of respondents. In
the conduct of their work, petitioners relied mainly on their "expertise that is characteristic of the cockfight gambling," and
were never given by respondents any tool needed for the performance of their work.

102: Atok Big Wedge Co, Inc. vs. Gison, G.R. No. 169510, 8 August 2011

Respondent Jesus P. Gison was engaged as part-time consultant on retainer basis by petitioner Atok Big Wedge Company,
Inc. through its then Asst. Vice-President and Acting Resident Manager, Rutillo A. Torres. As a consultant on retainer basis,
respondent assisted petitioner's retained legal counsel with matters pertaining to the prosecution of cases against illegal
surface occupants within the area covered by the company's mineral claims. Respondent was likewise tasked to perform
liaison work with several government agencies, which he said was his expertise.

Petitioner did not require respondent to report to its office on a regular basis, except when occasionally requested by the
management to discuss matters needing his expertise as a consultant. As payment for his services, respondent received a
retainer fee of 3,000.00 a month, which was delivered to him either at his residence or in a local restaurant. The parties
executed a retainer agreement, but such agreement was misplaced and can no longer be found.

The said arrangement continued for the next eleven years. Sometime thereafter, since respondent was getting old, he
requested that petitioner cause his registration with the Social Security System (SSS), but petitioner did not accede to his
request. Respondent filed a Complaint for illegal dismissal, unfair labor practice, underpayment of wages, non-payment of
13th month pay, vacation pay, and sick leave pay with the National Labor Relations Commission.

Labor Arbiter Rolando D. Gambito rendered a Decision ruling in favor of the petitioner. Finding no employer-employee
relationship between petitioner and respondent, the Labor Arbiter dismissed the complaint for lack of merit. Respondent
then appealed the decision to the NLRC however, it affirms the decision of the Labor Arbiter. Aggrieved respondent filed
a petition for review under Rule 65 of the Rules of Court before the CA questioning the decision and resolution of the
NLRC. The CA then rendered a decision in favor of the respondent that there is indeed an employer-employee relationship
between the petitioner and the respondent.

Issue: Whether or not Jesus Gison is an independent contractor?

Held: Yes. To ascertain the existence of an employer-employee relationship jurisprudence has invariably adhered to the
four-fold test, to wit: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employee's conduct, or the so-called "control test." Of these four, the last one is
the most important. The so-called "control test" is commonly regarded as the most crucial and determinative indicator of
the presence or absence of an employer-employee relationship. Under the control test, an employer-employee relationship
exists where the person for whom the services are performed reserves the right to control not only the end achieved, but
also the manner and means to be used in reaching that end.

Applying the aforementioned test, an employer-employee relationship is apparently absent in the case at bar. Among other
things, respondent was not required to report every day during regular office hours of petitioner. Respondent's monthly
retainer fees were paid to him either at his residence or a local restaurant. More importantly, petitioner did not prescribe the
manner in which respondent would accomplish any of the tasks in which his expertise as a liaison officer was needed;
respondent was left alone and given the freedom to accomplish the tasks using his own means and method. Respondent was
assigned tasks to perform, but petitioner did not control the manner and methods by which respondent performed these
tasks. Verily, the absence of the element of control on the part of the petitioner engenders a conclusion that he is not an
employee of the petitioner.

103. Manila Electric Company vs. Buenamira, G.R. No. 145271, July 14, 2005

Facts: The individual respondents are licensed security guards formerly employed by Peoples Security, Inc. (PSI) and
deployed as such at MERALCOs head office in Ortigas Avenue, Pasig, Metro Manila. On November 30, 1990, the security
service agreement between PSI and MERALCO was terminated. Immediately thereafter, fifty-six of PSIs security guards,
including herein eight individual respondents, filed a complaint for unpaid monetary benefits against PSI and MERALCO.
Subsequently, the individual respondents were absorbed by ASDAI and retained at MERALCOs head office.On June 29,
1992, Labor Arbiter Manuel P. Asuncion rendered a decision in favor of the former PSI security guards, including the
individual respondents.

Less than a month later, or on July 21, 1992, the individual respondents filed another complaint for unpaid monetary
benefits, this time against ASDAI and MERALCO. On July 25, 1992, the security service agreement between respondent
Advance Forces Security & Investigation Services, Inc. (AFSISI) and MERALCO took effect, terminating the previous
security service agreement with ASDAI. Except as to the number of security guards, the amount to be paid the agency, and
the effectivity of the agreement, the terms and conditions were substantially identical with the security service agreement
with ASDAI. On July 29, 1992, the individual respondents amended their complaint to implead AFSISI as party respondent.
On August 11, 1992 they again amended their complaint to allege that AFSISI terminated their services on August 6, 1992
without notice and just cause and therefore guilty of illegal dismissal.

ASDAI denied in general terms any liability for the claims of the individual respondents, claiming that there is nothing due
them in connection with their services. On the other hand, MERALCO denied liability on the ground of lack of employer-
employee relationship with individual respondents. It averred that the individual respondents are the employees of the
security agencies it contracted for security services; and that it has no existing liability for the individual respondents claims
since said security agencies have been fully paid for their services per their respective security service agreement.

Labor Arbiter Pablo C. Espiritu, Jr. rendered a Decision holding ASDAI and MERALCO jointly and solidarily liable to the
monetary claims of individual respondents and dismissing the complaint against AFSISI.

Issue: Whether or not ADAI and AFSISI were engaged in job contracting

Held: Yes. ASDAI and AFSISI are not "labor-only" contractors. There is "labor only" contract when the person acting as
contractor is considered merely as an agent or intermediary of the principal who is responsible to the workers in the same
manner and to the same extent as if they had been directly employed by him. On the other hand, "job (independent)
contracting" is present if the following conditions are met: (a) the contractor carries on an independent business and
undertakes the contract work on his own account under his own responsibility according to his own manner and method,
free from the control and direction of his employer or principal in all matters connected with the performance of the work
except to the result thereof; and (b) the contractor has substantial capital or investments in the form of tools, equipment,
machineries, work premises and other materials which are necessary in the conduct of his business. Given the above
distinction and the provisions of the security service agreements entered into by petitioner with ASDAI and AFSISI, the
Court is convinced that ASDAI and AFSISI were engaged in job contracting.

The individual respondents cannot be considered as regular employees of the MERALCO for, although security services
are necessary and desirable to the business of MERALCO, it is not directly related to its principal business and may even
be considered unnecessary in the conduct of MERALCOs principal business, which is the distribution of electricity.

Furthermore, the fact that the individual respondents filed their claim for unpaid monetary benefits against ASDAI is a clear
indication that the individual respondents acknowledge that ASDAI is their employer.

104: Abella vs. PLDT, G.R. No. 159469, June 8, 2005

Facts: Respondent PSI entered into an agreement with the PLDT to provide the latter with such number of qualified
uniformed and properly armed security guards for the purpose of guarding and protecting PLDTs installations and
properties from theft, pilferage, intentional damage, trespass or other unlawful acts. Under the agreement, it was expressly
provided that there shall be no employer-employee relationship between the PLDT and the security guards, which may be
supplied to it by PSI, and that the latter shall have the entire charge, control and supervision over the work and services of
the supplied security guards. It was likewise stipulated therein that PSI shall also have the exclusive authority to select,
engage, and discharge its security guards, with full control over their wages, salaries or compensation. PLDTs Security
Division interviewed these security guards and asked them to fill out personal data sheets. Those who did not meet the
height requirements were sent back by PLDT to PSI. Jonathan Daguno, who did not pass the requirement of PLDT was then
deployed by PSI to PCIBank Makati.

On 05 June 1995, sixty-five (65) security guards supplied by respondent PSI filed a Complaint for regularization against
the PLDT with the Labor Arbiter. The Complaint alleged inter alia that petitioner security guards have been employed by
the company through the years commencing from 1982 and that all of them served PLDT directly for more than 1 year. It
was further alleged that PSI or other agencies supply security to PLDT, which entity controls and supervises the
complainants work through its Security Department. Petitioners likewise alleged that PSI acted as the middleman in the
payment of the minimum pay to the security guards, but no premium for work rendered beyond eight hours was paid to
them nor were they paid their 13th month pay. In sum, the Complaint states that inasmuch as the complainants are under
the direct control and supervision of PLDT, they should be considered as regular employees by the latter with compensation
and benefits equivalent to ordinary rank-and-file employees of the same job grade.

Forthwith, after filing the complaint, the security guards formed the PLDT Company Security Personnel Union with
petitioner Zaldy Abella as union president. The Labor Arbiter dismissed the complaint for lack of merit. On appeal, the
NLRC affirmed in toto the Labor Arbiters decision.The Court of Appeals, in turn, affirmed the NLRCs disquisition.
According to the Court of Appeals, evidence demonstrates that it is respondent PSI which is petitioners employer, not the
PLDT inasmuch as the power of selection over the guards lies with the former. The Court of Appeals also took cognizance
of the fact that petitioners have collected their wages from PSI.
Issue: Whether or not an employer-employee relationship exists between petitioners and respondent PLDT

Held. No. Applying the ruling of Philippine Airlines, Inc. v. National Labor Relations Commission, provides the legal
yardstick in addressing this issue. In that case, Unicorn Security Services, Inc. (USSI) and Philippine Airlines, Inc. (PAL)
executed a security service agreement where USSI was designated therein as the contractor. In determining which between
PAL and USSI the employer of the security guards is, we considered the following factors in considering the existence of
an employer-employee relationship: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the
power to dismiss; and (4) the power to control the employees conduct. Considering these elements, we held in the said case
that the security guards of PAL were the employees of the security agency, not PAL. We explained why-

In the instant case, the security service agreement between PAL and USSI provides the key to such consideration. A careful
perusal thereof, especially the terms and conditions embodied in paragraphs 4, 6, 7, 8, 9, 10, 13 and 20 quoted earlier in this
ponencia, demonstrates beyond doubt that USSI - and not PAL was the employer of the security guards. It was USSI
which (a) selected, engaged or hired and discharged the security guards; (b) assigned them to PAL according to the number
agreed upon; (c) provided, at its own expense, the security guards with firearms and ammunitions; (d) disciplined and
supervised them or controlled their conduct; (e) determined their wages, salaries, and compensation; and (f) paid them
salaries or wages. Even if we disregard the explicit covenant in said agreement that "there exists no employer-employee
relationship between CONTRACTOR and/or his guards on the one hand, and PAL on the other" all other considerations
confirm the fact that PAL was not the security guards employer.

On the first factor, applying PAL v. NLRC as our guidepost in the case before us, the Labor Arbiter, the NLRC and the Court
of Appeals rendered a consistent finding based on the evidence adduced that it was the PSI, the security provider of the
PLDT, which selected, engaged or hired and discharged the security guards. The Labor Arbiter was no less emphatic

On the second factor, the Labor Arbiter as well as the NLRC and the Court of Appeals are all in agreement that it is PSI
that determined and paid the petitioners wages, salaries, and compensation. As elucidated by the Labor Arbiter, petitioners
witness testified that his wages were collected and withdrawn at the office of PSI and PLDT pays PSI for the security
services on a lump-sum basis and that the wages of complainants are only a portion of the total sum. The signature of the
PLDT supervisor in the Daily Time Records does not ipso facto make PLDT the employer of complainants inasmuch as the
Labor Arbiter had found that the record is replete with evidence showing that some of the Daily Time Records do not bear
the signature of a PLDT supervisor yet no complaint was lodged for nonpayment of the guards wages evidencing that the
signature of the PLDTs supervisor is not a condition precedent for the payment of wages of the guards. Notably, it was not
disputed that complainants enjoy the benefits and incentives of employees of PSI and that they are reported as employees
of PSI with the SSS.

Anent the third and fourth factors, petitioners capitalize on the delinquency reports prepared by PLDT personnel against
some of the security guards as well as certificates of participation in civil disturbance course, certificates of attendance in
first aid training, certificate of completion in fire brigade training seminar and certificate of completion on restricted land
mobile radio telephone operation to show that the petitioners are under the direct control and supervision of PLDT and that
the latter has, in fact, the power to dismiss them.

The Labor Arbiter found from the evidence that the delinquency reports were nothing but reminders of the infractions
committed by the petitioners while on duty which serve as basis for PLDT to recommend the termination of the concerned
security guard from PLDT. As already adverted to earlier, termination of services from PLDT did not ipso facto mean
dismissal from PSI inasmuch as some of those pulled out from PLDT were merely detailed at the other clients of PSI as in
the case of Jonathan Daguno, who was merely transferred to PCIBank Makati.

105 Wack Wack Golf and Country Club vs. NLRC, G.R. No. 149793, April 15, 2005

On November 29, 1996, a fire destroyed a large portion of the main clubhouse of the Wack Wack Golf and Country Club
(Wack Wack), including its kitchen. In view of the reconstruction of the whole clubhouse complex, Wack Wack filed a
notice with the Department of Labor and Employment (DOLE) on April 14, 1997 that it was going to suspend the operations
of the Food and Beverage (F & B) Department one (1) month thereafter. Notices to 54 employees (out of a complement of
85 employees in the department) were also sent out, informing them that they need not report for work anymore after April
14, 1997 but that they would still be paid their salaries up to May 14, 1997. They were further told that they would be
informed once full operations in Wack Wack resume.

On October 15, 1997, Wack Wack entered into a Management Contract 13 with Business Staffing and Management, Inc.
(BSMI), a corporation engaged in the business as Management Service Consultant undertaking and managing for a fee
projects which are specialized and technical in character like marketing, promotions, merchandising, financial management,
operation management and the like. Pursuant to the Agreement, the retired employees of Wack Wack by reason of their
experience were given priority by BSMI in hiring. On October 21, 1997, respondents Cagasan and Dominguez filed their
respective applications for employment with BSMI. They were eventually hired by BSMI to their former positions in Wack
Wack as project employees and were issued probationary contracts. Aside from BSMI, Wack Wack also engaged several
contractors which were assigned in various operating functions of the club.

In the course of its assessment, BSMI saw that the positions of Cagasan and Dominguez were redundant. In the case of
respondent Cagasan, her tasks as personnel officer were likewise being taken cared of by the different management service
contractors; on the other hand, Dominguezs work as telephone operator was taken over by the personnel of the accounting
department. Thus, in separate Letters dated February 27, 1998, the services of Dominguez and Cagasan were terminated.

Thereafter, the three (3) employees filed their respective complaints with the National Labor Relations Commission (NLRC)
for illegal dismissal and damages against Wack Wack and BSMI.

Issue: Whether or not BSMI is an independent contractor or labor-only contractor?

Held: BSMI is an independent contractor, engaged in the management of projects, business operations, functions, jobs and
other kinds of business ventures, and has sufficient capital and resources to undertake its principal business. It had provided
management services to various industrial and commercial business establishments. Its Articles of Incorporation proves its
sufficient capitalization. In December 1993, Labor Secretary Bienvenido Laguesma, in the case of In re Petition for
Certification Election Among the Regular Rank-and-File Employees Workers of Byron-Jackson (BJ) Services International
Incorporated, Federation of Free Workers (FFW)-Byron Jackson Services Employees Chapter,42 recognized BSMI as an
independent contractor. As a legitimate job contractor, there can be no doubt as to the existence of an employer-employee
relationship between the contractor and the workers.

BSMI admitted that it employed the respondents, giving the said retired employees some degree of priority merely because
of their work experience with the petitioner, and in order to have a smooth transition of operations.44 In accordance with its
own recruitment policies, the respondents were made to sign applications for employment, accepting the condition that they
were hired by BSMI as probationary employees only. Not being contrary to law, morals, good custom, public policy and
public order, these employment contracts, which the parties are bound are considered valid. Unfortunately, after a study and
evaluation of its personnel organization, BSMI was impelled to terminate the services of the respondents on the ground of
redundancy. This right to hire and fire is another element of the employer-employee relationship45 which actually existed
between the respondents and BSMI, and not with Wack Wack.

There being no employer-employee relationship between the petitioner and respondents Cagasan and Dominguez, the latter
have no cause of action for illegal dismissal and damages against the petitioner. Consequently, the petitioner cannot be
validly ordered to reinstate the respondents and pay them their claims for backwages.

106. Chavez vs. NLRC

GR No. 146530
January 17, 2005

Facts of the Case:

Supreme Packaging Inc., a manufacturing company for cartons and packaging materials for export and
distribution, tasked Pedro Chavez on 25 October 1984 to deliver company products from its factory in Mariveles, Bataan
to its customers in Metro Manila. His delivery trips were made at night time andwere in accordance with the routing slips
issued by the company. In 1992, he expressed his desire to avail himself of the benefits of a regular employee to his plant
manager whom failed to do so.
In 1995, Chavez filed a complaint for regularization with the Regional Arbitration in San Fernando, Pampanga.
But before the hearing, the company terminated his services due to his allegedly violation of the terms and condition of
the contract of service dated 12 December 1984 which he and the company entered into. Chavez allegedly failed to
observe the minimum degree of diligence in the proper maintenance of the truck he was using causing expenses to the
company.The company also denied the existence of an employer-employee relationship between them because Chavez
was an independent contractor evidenced by the said contract of service.

In 3 February 1997, the Labor Arbiter found the company guilty of illegal dismissal. The contract of service
invoked by the respondents was declared null and void as it constituted a circumvention of the constitutional provision
affording full protection to labor and security of tenure. The Labor Arbiter found that the petitioners dismissal was
anchored on his insistent demand to be regularized. Hence, lacks of a valid and just cause.

The company appealed with the NLRC it affirmed the decision of the Labor Arbiter in the Decision dated 27
January 1998. Then the company sought reconsideration for this Decision and rendered another Decision dated 10 July
1998 reversing the former and holding that no employer-employee relationship existed and upheld the contract of service
and dismissed the complaint for illegal dismissal. Chavez sought for reconsideration but was denied in the Resolution
dated 7 September 1998. Thus, he filed with the CA a petition for certiorari.

CA reversed and reinstated the decision of the Labor Arbiter, ruling that Chavez was a regular employee. CA also
reasoned that the Chavez could not be considered an independent contractor since he had no substantial capital in the form
of tools and machinery and he drives the company truck. Accordingly, the respondents were declared guilty of illegal
dismissal and the decision of the Labor Arbiter was reinstated. But CA assailed Resolution dated 15 December 2000
upon companys motion for reconsideration and upholding the contract of service. Hence, Chavez recourse to this Court.

Issue/Ruling:

Whether there existed an employer-employee relationship between the Chavez and Supreme Packaging Inc.

Yes, there is an employer-employee relationship.

The elements to determine the existence of an employment relationship are:

(1) the selection and engagement of the employee;
(2) the payment of wages;
(3) the power of dismissal; and
(4) the employers power to control the employees conduct.

The most important element is no. 4, not only as to the result of the work to be done, but also as to the means and methods
to accomplish it. All the four elements are present in this case.

Whether Chavez is an independent contractor.

No, he is not an independent contractor.

Compared to an employee, an independent contractor is one who carries on a distinct and independent business and
undertakes to perform the job, work, or service on its own account and under its own responsibility according to its own
manner and method, free from the control and direction of the principal in all matters connected with the performance of
the work except as to the results thereof. Hence, while an independent contractor enjoys independence and freedom from
the control and supervision of his principal, an employee is subject to the employers power to control the means and
methods by which the employees work is to be performed and accomplished.

Although the respondents denied that they exercised control over the manner and methods by which the petitioner
accomplished his work, a careful review of the records shows that the latter performed his work as truck driver under the
respondents supervision and control.
Ratio Decidendi:
Thus, the lack of a valid and just cause in terminating the services of the petitioner renders his dismissal illegal.
Under Article 279 of the Labor Code, an employee who is unjustly dismissed is entitled to reinstatement, without loss of
seniority rights and other privileges, and to the payment of full backwages, inclusive of allowances, and other benefits or
their monetary equivalent, computed from the time his compensation was withheld from him up to the time of his actual
reinstatement. However, as found by the Labor Arbiter, the circumstances obtaining in this case do not warrant the
petitioners reinstatement. A more equitable disposition, as held by the Labor Arbiter, would be an award of separation pay
equivalent to one month for every year of service from the time of his illegal dismissal up to the finality of this judgment
in addition to his full backwages, allowances and other benefits.

Dispositive Portion:
The petition for review for certiorari was granted, reversing and setting aside the Decision of CA; finding
Respondent Supreme Packaging Inc. guilty of illegally terminating the employment of Chavez.

107. Manila Water Company vs. Pena

G.R. No. 158255
July 8, 2004

Facts of the Case:

Pursuant to RA 8041 known as Natioanl Water Crisis Act of 1995 which manage the distribution of water system
in the East Zone of Metro Manila, petitioner is one of the two private concessionaires contracted by the Metropolitan
Waterworks and Sewerage System. It absorbed the MWSSs employees under a Concession Agreement and terminated
those 121 employees not absorbed. Nevertheless, the 121 employees engaged their services as collectors even without
written contract from 1 August 1997 to 31 August 1997. Thereafter, they signed a three month contract to perform
collection services for eight branches of petitioner.

Association Collectors Group, Inc. (ACGI) was incorporated by the 121 collectors before the end of the 3 month
contract. But most of them were transferred by the petitioner to First Classic Courier Services, a newly registered
corporation. Only the private respondents remained with ACGI and continued to transact with ACGI to do its service until
8 February 1999 when petitioner terminated the contract with ACGI.

Private respondent filed a complaint for illegal dismissal, which was favoured by Labor Arbiter Carpio in his
decision dated 31 May 2000. Both parties appealed to the NLRC, reversing the prior decision of the Labor Arbiter. A
petition for certiorari was filed by the private respondents to CA with the contention that the NLRC acted with grave
abuse of discretion amounting to lack or excess of jurisdiction when it reversed the decision of the Labor Arbiter. CA
reversed the decision of NLRC and reinstated with modification the decision of the Labor Arbiter, in favor of the private
respondents. Hence, this petition.

Issue:
Whether ACGI is an independent contractor or a labor-only contractor.

Ruling:
ACGI is not an independent contractor or a labor only contractor.

Job contracting is permissible only if the following conditions are met: 1) the contractor carries on an independent
business and undertakes the contract work on his own account under his own responsibility according to his own manner
and method, free from the control and direction of his employer or principal in all matters connected with the performance
of the work except as to the results thereof; and 2) the contractor has substantial capital or investment in the form of tools,
equipment, machineries, work premises, and other materials which are necessary in the conduct of the business.
(De los Santos v. NLRC)
Labor-only contracting as defined in Section 5, Department Order No. 18-02, Rules Implementing Articles 106-109 of the
Labor Code[14] refers to an arrangement where the contractor or subcontractor merely recruits, supplies or places workers
to perform job, work or service for a principal, and any of the following elements is present:
(i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service
to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing
activities which are directly related to the main business of the principal; or
(ii) The contractor does not exercise the right to control over the performance of the work of the contractual employee.

Given the above criteria, we agree with the Labor Arbiter that ACGI was not an independent contractor.

ACGI does not have substantial capitalization or investment in the form of tools, equipment, machineries, work premises,
and other materials, to qualify as an independent contractor. private respondents was directly related to the principal
business or operation of the petitioner. And ACGI did not carry on an independent business or undertake the performance
of its service contract according to its own manner and method, free from the control and supervision of its principal,
petitioner.

Dispositive Portion:
Decision of CA dated November 29, 2002 is reversed. Decision of Labor Arbiter is reinstated and affirmed with
modification.

108. Sonza vs. ABS-CBN

G.R. No. 138051
June 10, 2004

Facts of the Case:

ABS_CBN signed an Agreement in May 1994 with Mel and Jay Management and Development Corporation
represented by SONZA, the President and General Manager and Carmela Tiangco, the EVP and Treasurer. In this
Agreement, SONZA will be providing ABS-CBN talent for radio and television. But in 1 April 1996, SONZA wrote a
letter to ABS-CBN President expressing his resignation and considering this as a breach and notified about the recission
of the said Agreement.

Sonza filed a complaint against ABS-CBN for not paying his salaries, separation pay, service incentive leave pay,
13th month pay, signing bonus, travel allowance and amounts due under the Employees Stock Option Plan (ESOP). But
ABS-CBN file a Motion to Dismiss due to the absence of employer-employee relationship. Labor Arbiter rendered his
Decision dismissing the complaint for lack of jurisdiction and finding no relationship existed between Sonza and ABS-
CBN.

Sonza appealed to the NLRC affirming Labor Arbiters decision moving Sonza to file a motion for
reconsideration with NLRC but denied it. Sonza filed a special civil action for certiorari to CA but was dismissed. Hence,
this petition.

Issue:
Whether or not Sonza is an employee or an independent contractor

Ruling:

SONZA maintains that all essential elements of an employer-employee relationship are present in this case. Case
law has consistently held that the elements of an employer-employee relationship are: (a) the selection and engagement of
the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employee
on the means and methods by which the work is accomplished. The last element, the so-called control test, is the most
important element.
SONZA protests the Labor Arbiters finding that he is a talent of MJMDC, which contracted out his services to
ABS-CBN. The Labor Arbiter ruled that as a talent of MJMDC, SONZA is not an employee of ABS-CBN. SONZA
insists that MJMDC is a labor-only contractor and ABS-CBN is his employer.
In a labor-only contract, there are three parties involved: (1) the labor-only contractor; (2) the employee who is ostensibly
under the employ of the labor-only contractor; and (3) the principal who is deemed the real employer. Under this scheme,
the labor-only contractor is the agent of the principal. The law makes the principal responsible to the employees of the
labor-only contractor as if the principal itself directly hired or employed the employees.[48] These circumstances are not
present in this case.
There are essentially only two parties involved under the Agreement, namely, SONZA and ABS-CBN. MJMDC
merely acted as SONZAs agent.
 ABS-CBN claims that there exists a prevailing practice in the broadcast and entertainment industries to treat
talents like SONZA as independent contractors. SONZA argues that if such practice exists, it is void for violating the right
of labor to security of tenure. The right of labor to security of tenure as guaranteed in the Constitution arises only if there
is an employer-employee relationship under labor laws. Not every performance of services for a fee creates an employer-
employee relationship. To hold that every person who renders services to another for a fee is an employee - to give
meaning to the security of tenure clause - will lead to absurd results.

Dispositive Portion:
Decision of CA affirmed.
109. San Miguel Corporation vs. MAERC
G.R. No. 144672
July 10, 2003

Facts of the Case:

Respondent workers filed their complaints against petitioner San Miguel Corporation (SMC) and Maerc
Integrated Services, Inc. (MAERC) for illegal dismissal, underpayment of wages, non-payment of service incentive leave
pays and other labor standards benefits, and for separation pays from 25 June to 24 October 1991. SMC denied liability
for the claims and averred that the complainants were not its employees but of MAERC, an independent contractor whose
primary corporate purpose was to engage in the business of cleaning, receiving, sorting, classifying, etc., glass and metal
containers. The Labor Arbiter rendered a decision holding that MAERC was an independent contractor. On appeal, the
National Labor Relations Commission (NLRC) ruled that MAERC was a labor-only contractor and that complainants
were employees of SMC. The NLRC also held that whether MAERC was a job contractor or a labor-only contractor,
SMC was still solidarily liable with MAERC for the latter's unpaid obligations, citing Art. 109 of the Labor Code. Thus,
the NLRC modified the judgment of the Labor Arbiter and held SMC jointly and severally liable with MAERC for
complainants' separation benefits. In addition, both respondents were ordered to pay jointly and severally an indemnity fee
of P2,000.00 to each complainant. SMC filed a petition for certiorari with the Court which referred the petition to the
Court of Appeals. The Court of Appeals denied the petition and affirmed the decision of the NLRC. Hence, the present
petition.||| (San Miguel Corp. v. MAERC Integrated Services Inc., G.R. No. 144672, [July 10, 2003], 453 PHIL 543-576)

Issue:
Whether MAERC is an independent contractor or a labor-only contractor, SMC is liable with MAERC for the
latter's unpaid obligations to MAERC's workers.
Ruling:
On this point, we agree with petitioner as distinctions must be made. In legitimate job contracting, the law creates
an employer-employee relationship for a limited purpose, i.e., to ensure that the employees are paid their wages.[34] The
principal employer becomes jointly and severally liable with the job contractor only for the payment of the employees'
wages whenever the contractor fails to pay the same.Other than that, the principal employer is not responsible for any
claim made by the employees.

On the other hand, in labor-only contracting, the statute creates an employer-employee relationship for a comprehensive
purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer
and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly
employed by the principal employer. The principal employer therefore becomes solidarily liable with the labor-only
contractor for all the rightful claims of the employees.

This distinction between job contractor and labor-only contractor, however, will not discharge SMC from paying the
separation benefits of the workers, inasmuch as MAERC was shown to be a labor-only contractor; in which case,
petitioner's liability is that of a direct employer and thus solidarily liable with MAERC.

The Supreme Court denied the petition and declared Maerc Integrated Services, Inc. to be a labor-only contractor.
Accordingly, both petitioner San Miguel Corporation and respondent Maerc Integrated Services, Inc., were ordered to
jointly and severally pay complainant's separation benefits and wage differentials as may be finally recomputed by the
Labor Arbiter. The evidence disclosed that petitioner SMC played a large and indispensable part in the hiring of
MAERC's workers. It was also established that majority of the complainants had already been working for SMC long
before the signing of the service contract between SMC and MAERC in 1988. There were also indicia that petitioners
actively supervised the complainants by maintaining a constant presence in the workplace through its own checkers. It
was also established that SMC exerted control over the work performed by the segregators or cleaners, albeit through the
instrumentality of MAERC. The conduct by SMC representatives went beyond a mere reminder with respect to the
improperly cleaned/segregated bottles or a genuine concern in the outcome of the job contracted by MAERC. Although
calling the attention of its contractors as to the quality of their services may reasonably be done by SMC, there appeared
to be no need to instruct MAERC as to what disciplinary measures should be imposed on the specific workers who were
responsible for rejections of bottles.

Dispositive Portion:
 Petition was denied. CA Decision and Resolution are affirmed with Modification. Labor Arbiter is directed to
recompute separation benefits and wage differentials.
110. Tan vs. Lagrama and CA
G.R. No. 151228
August 15, 2002

Facts of the Case:

Lagrama is a painter in of billboards and murals for motion picture for the Crown and Empire Theaters owned by
Rolando Tan in Butuan City for 10 years. In 17 October 1998, Lagrama was summoned by Tan to discharge him after
accusing him of urinating in his work area.

Lagrama filed a complaint with the Sub-Regional Arbitration Branch No. X of the NLRC in Butuan City alleging that he
had been illegally dismissed and sought reinvestigation and payment of 13th month pay, service incentive leave pay,
salary differential, and damages. But Tan denied that Lagrama was his employee because he is an independent contractor.
Labor Arbiter Rogelio Legaspi directed the parties to file their position papers when no amicable settlement had been
reached. Labor Arbiter decided the case in favour of Lagrama that he was illegally dismissed and Tan to pay for a sum of
money.

Upon appeal of Tan to the NLRC in Cagayan de Oro City, Lagrama was found to be an independent contractor, reversing
the decision of the Labor Arbiter. Lagrama filed a Motion for Reconsideration but was dismissed for lack of merit. He
then filed a petition for certiorari in the CA which granted the petition, annulling the NLRC Resolution. Tan moved for
reconsideration but CA denied. Hence this petition.

Issue:
Whether or not an employer-employee relationship existed between petitioner and private respondent.

Ruling:
Yes, there is an employer-employee relationship existing between the parties.

In determining whether there is an employer-employee relationship, we have applied a four-fold test, to wit: (1)
whether the alleged employer has the power of selection and engagement of employees; (2) whether he has control of the
employee with respect to the means and methods by which work is to be accomplished; (3) whether he has the power to
dismiss; and (4) whether the employee was paid wages. These elements of the employer-employee relationship are present
in this case.

In the case at bar, albeit petitioner Tan claims that private respondent Lagrama was an independent contractor and
never his employee, the evidence shows that the latter performed his work as painter under the supervision and control of
petitioner. Lagrama worked in a designated work area inside the Crown Theater of petitioner, for the use of which
petitioner prescribed rules. The rules included the observance of cleanliness and hygiene and a prohibition against
urinating in the work area and any place other than the toilet or the rest rooms.[9] Petitioners control over Lagramas work
extended not only to the use of the work area, but also to the result of Lagramas work, and the manner and means by
which the work was to be accomplished.

Moreover, it would appear that petitioner not only provided the workplace, but supplied as well the materials used for the
paintings, because he admitted that he paid Lagrama only for the latters services

Dispositive Portion:
The decision of the Court of Appeals, reversing the decision of the National Labor Relations Commission and
reinstating the decision of the Labor Arbiter, is AFFIRMED with the MODIFICATION that the backwages and other
benefits awarded to private respondent LeovigildoLagrama should be computed from the time of his dismissal up to the
time of the finality of this decision, without any deduction and qualification. However, the service incentive leave pay
awarded to him is DELETED.

111. SSS vs CA and Ayalde

G.R. No. 100388
December 14, 2000

Facts of the Case:

After the death of her husband, Margarita Tana, widow of the late Ignacio Tana, Sr., became aware of the fact that her
husband's employer, Conchita Ayalde, never reported him for Social Security System (SSS) coverage. Margarita filed a
petition before the Social Security Commission and prayed that Ayalde be ordered to pay the SSS premium contributions
and that SSS should grant her the funeral and pension benefits due her. The SSS, in a petition-in-intervention, revealed
that Ayalde was never registered as a member-employer of the SSS, and consequently, Tana, Sr. was never registered as
member-employee. Respondent Ayalde belied the allegation that Tana, Sr. was her employee, admitting only that he was
hired intermittently as an independent contractor to plow, harrow, or burrow the plantation she owned and rented. After
hearing both parties, the Social Security Commission held that Tana, Sr. had been employed continuously from January
1961 to March 1979 with a salary based on the minimum wage prevailing during his employment. Not having reported
the petitioner's husband for coverage with the SSS, respondent Conchita Ayalde was made liable to pay damages
equivalent to the death benefits and funeral expenses of Tana, Sr. Not satisfied with the Commission's ruling, Ayalde
appealed to the Court of Appeals. The Court of Appeals rendered judgment in favor of Conchita Ayalde and dismissed the
claim of Margarita Tana. The SSS, as intervenor-appellee, filed a motion for reconsideration, but was denied. Hence, this
petition for review on certiorari. The pivotal issue to be resolved in this petition is whether or not an agricultural laborer
who was hired on "pakyaw" basis can be considered an employee entitled to compulsory coverage and corresponding
benefits under the Social Security Law.

Issue:
Whether or not an agricultural laborer who was hired on pakyaw basis can be considered an employee entitled to
compulsory coverage and corresponding benefits under the Social Security Law.

Ruling:
No particular form of evidence is required to prove the existence of an employer-employee relationship. Any
competent and relevant evidence to prove the relationship may be admitted.For, if only documentary evidence would be
required to show that relationship, no scheming employer would ever be brought before the bar of justice, as no employer
would wish to come out with any trace of the illegality he has authored considering that it should take much weightier
proof to invalidate a written instrument. Thus, as in this case where the employer-employee relationship between
petitioners and Esita was sufficiently proved by testimonial evidence, the absence of time sheet, time record or payroll has
become inconsequential.

Clearly, then, the testimonial evidence of the claimant and her witnesses constitute positive and credible evidence of the
existence of an employer-employee relationship between Tana and Ayalde. As the employer, the latter is duty-bound to
keep faithful and complete records of her business affairs, not the least of which would be the salaries of the workers. And
yet, the documents presented have been selective, few and incomplete in substance and content. Consequently, Ayalde has
failed to convince us that, indeed, Tana was not her employee.

The argument is raised that Tana is an independenent contractor because he was hired and paid wages on pakyaw basis.
We find this assertion to be specious for several reasons.

The Supreme Court reversed and set aside the decision of the Court of Appeals and the resolution of the Social Security
Commission was reinstated. There was no shred of evidence to show that Tana was only a seasonal worker. All witnesses,
including Ayalde, testified that Tana and his family resided in the plantation. The only logical explanation for this set up
was that Tana was working for most part of the year exclusively for Ayalde. A closer scrutiny of the records revealed that
while Ayalde may not have directly imposed on Tana the manner and methods to follow in performing his tasks, she did
exercise control through her overseer. Under the circumstances, the relationship between Ayalde and Tana has more of the
attributes of employer-employee than that of an independent contractor hired to perform a specific project.

Ratio Decidendi:
Ayalde failed to counter these positive assertions. Even on the assumption that there were no deductions, the fact
remains that Tana was and should have been covered under the Social Security Law. The circumstances of his
employment place him outside the ambit of the exception provided in Section 8(j) of Republic Act No. 1611, as amended
by Section 4 of R.A. 2658.

Dispositive Portion:
CA Resolution is reversed and set aside. The Resolution of SSS is reinstated.
112. Neri and Cabelin vs NLRC
G.R. Nos. 97008-09
July 23, 1993

Facts of the Case:

Virginia G. Neri and Jose Cabelin are employees of Building Care Corporation (BCC), which provides janitorial and other
specific services to various firms. They were assigned to wok in one of these firms, which is the Far East Bank and Trust
Company (FEBTC).

Neri and Cabelin now sues FEBTC to recognize them as its regular employees and be paid the same wages which its
employees receive. They contend that BCC is engaged in "labor-only" contracting because it failed to adduce evidence
purporting to show that it invested in the form of tools, equipment, machineries, work premises and other materials which
are necessary in the conduct of its business. Moreover, they argue that they perform duties which are directly related to
the principal business or operation of FEBTC. If the definition of "labor-only" contracting is to be read in conjunction
with job contracting, then the only logical conclusion is that BCC is a "labor-only" contractor.

The Labor Arbiter dismissed the complaint for lack of merit. BCC was considered an independent contractor because it
proved it had substantial capital. Thus, petitioners were held to be regular employees of BCC, not FEBTC. Thus, this
appeal.

Issue: Whether or not the petitioners are employees of FEBTC.

Ruling: No.

It is well-settled that there is "labor-only" contracting where: (a) the person supplying workers to an employer does not
have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others; and, (b)
the workers recruited and placed by such person are performing activities which are directly related to the principal
business of the employer. Article 106 of the Labor Code defines "labor-only" contracting thus Art. 106. Contractor or
subcontractor. . . . There is "labor-only" contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the
workers recruited by such persons are performing activities which are directly related to the principal business of such
employer . . .

Based on the foregoing, BCC cannot be considered a "labor-only" contractor because it has substantial capital. While
there may be no evidence that it has investment in the form of tools, equipment, machineries, work premises, among
others, it is enough that it has substantial capital, as was established before the Labor Arbiter as well as the NLRC. In
other words, the law does not require both substantial capital and investment in the form of tools, equipment, machineries,
etc. This is clear from the use of the conjunction "or." If the intention was to require the contractor to prove that he has
both capital and the requisite investment, then the conjunction "and" should have been used. But, having established that it
has substantial capital, it was no longer necessary for BCC to further adduce evidence to prove that it does not fall within
the purview of "labor-only" contracting. There is even no need for it to refute petitioners contention that the activities they
perform are directly related to the principal business of respondent bank . . . In fact, the status of BCC as an independent
contractor was previously confirmed by this Court in Associated Labor Unions-TUCP v. National Labor Relations
Commission, where we held thus The public respondent ruled that the complainants are not employees of the bank but
of the company contracted to serve the bank. Building Care Corporation is a big firm which services, among others, a
university, an international bank, a big local bank, a hospital center, government agencies, etc. It is a qualified
independent contractor. The public respondent correctly ruled against petitioner's contentions

Ratio Decidendi:
The determination of employer-employee relationship involves factual findings. Absent any grave abuse of
discretion, and we find none in the case before us, we are bound by the findings of the Labor Arbiter as affirmed by
respondent NLRC.

Dispositive Portion:
Petition for certiorari is dismissed.
113. kamFilipinas Synthetic Fiber Corporation vs NLRC

FACTS: Filipinas Synthetic Fiber Corporation (FILSYN) a domestic corporation engaged in the manufacture of polyester
fiber, contracted with De Lima Trading and General Services (DE LIMA) for the performance of specific janitorial services
at the former's plant. Pursuant to the agreement Felipe Loterte, among others, was deployed at FILSYN to take care of the
plants.
Loterte sued FILSYN and DE LIMA as alternative defendants4 for illegal dismissal, underpayment of wages, non-
payment of legal holiday pay, service incentive leave pay and 13th month pay alleging that when a movement to demand
increased wages and 13th month pay arose among the workers on December 1991 he was accused by a certain Dodie La
Flores of having posted in the bulletin board at FILSYN an article attributing to management a secret understanding to block
the demand; and, for denying responsibility, his gate pass was unceremoniously cancelled on 6 February 1992 and he was
subsequently dismissed.
The Labor Arbiter ruled in favor of Loterte. (ruling that Loterte is a regular employee as he performed task usually
necessary or desirable in the business(Guarin ruling) and declare that FILSYN as the real employer of loterte and delima
as a mere labor contractor.) Hence FILSYN is liable. NLRC affirmed LA.
Petitioner contends that the NLRC committed grave abuse of discretion in holding DE LIMA as a labor-only contractor
with no substantial capital or investment. Petitioner insists that the evidence 9 it presented shows DE LIMA to be a
corporation duly registered with the SEC with substantial capitalization.
Petitioner also contends that it cannot still be considered as the real employer of Loterte since his work is not necessary
in the principal business of FILSYN which is the manufacture of polyester, and that present jurisprudence holds that the
performance of janitorial services, although directly related to the principal business of the alleged employer, is nonetheless
unnecessary since non-performance thereof will not cause production and company sales to suffer.
ISSUE: w/n Delima is a mere labor-only contractor? NO, De Lima is an independent job contractor.
w/n there is a direct employer-employee relationship exist between FILSYN and Loterte? No direct employer-
employee relationship exists between petitioner FILSYN and private respondent Felipe Loterte.
HELD: SC ruled that there is sufficient evidence to show that private respondent DE LIMA is an independent job contractor,
not a mere labor-only contractor. Under the Labor Code, two (2) elements must exist for a finding of labor-only contracting:
(a) the person supplying workers to an employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and (b) the workers recruited and placed by such persons are
performing activities directly related to the principal business of such employer.
These two (2) elements do not exist in the instant case. As pointed out by petitioner, private respondent DE LIMA is a
going concern duly registered with the Securities and Exchange Commission with substantial capitalization of
P1,600,000.00, P400,000.00 of which is actually subscribed.13 Hence, it cannot be considered as engaged in labor-only
contracting being a highly capitalized venture.14 Moreover, while the janitorial services performed by Felipe Loterte
pursuant to the agreement between FILSYN and DE LIMA may be considered directly related to the principal business of
FILSYN which is the manufacture of polyester fiber, nevertheless, they are not necessary in its operation.15 On the contrary,
they are merely incidental thereto, as opposed to being integral, without which production and company sales will not
suffer.16 Judicial notice has already been taken of the general practice in private as well as in government institutions and
industries of hiring janitorial services on an independent contractor basis.17 Consequently, DE LIMA being an independent
job contractor, no direct employer- employee relationship exists between petitioner FILSYN and private respondent Felipe
Loterte.18
With respect to its liability, however, petitioner cannot totally exculpate itself from the fact that respondent DE LIMA
is an independent job contractor. We agree with the Solicitor General that notwithstanding the lack of a direct employer-
employee relationship between FILSYN and Felipe Loterte, the former is still jointly and severally liable with respondent
DE LIMA for Loterte's monetary claims under Art. 109 of the Labor Code19 which explicitly provides

The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held
responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of
determining the extent of their civil liability under this Chapter, they shall be considered as direct employers (Italics
supplied).

However, a reduction of the Labor Arbiter's awards is in order.

114. PHIL FUJI XEROX CORPORATION VS NLRC

FACTS: Fuji Xerox entered into an agreement under which Skillpower, Inc. supplied workers to operate copier machines
of Fuji Xerox as part of the latters Xerox Copier Project in its sales offices. Pedro Garado was assigned as key operator at
Fuji Xeroxs Garado went on leave and his place was taken over by a substitute. Upon his return in March, he discovered
that there was a spoilage of over 600 copies. Afraid that he might be blamed for the spoilage, he tried to talk to a service
technician of Fuji Xerox into stopping the meter of the machine.

The technician refused Garados request, but this incident came to the knowledge of Fuji Xerox which, on May 31,
1983, reported the matter to Skillpower, Inc. The next day, Skillpower, Inc. wrote Garado, ordering him to explain. In the
meantime, it suspended him from work. Garado filed a complaint for illegal dismissal.

The Labor Arbiter found it was Skillpower, Inc. which exercised control and supervision over his work; that
Skillpower, Inc. had substantial capital and investments in machinery, equipment, and service vehicles, and assets. On the
other hand, the NLRC found Garado to be in fact an employee of petitioner Fuji Xerox and by it to have been illegally
dismissed.

Here, Fuji petitions that Skillpower is an independent contractor and Gerado is its employee: (1) Gerado was
recruited by Skillpower, (2) work done by Gerado was not necessary to the conduct of business of Fuji, (3) Gerado's salaries
and benefits were paid directly by Skillpower, (4) Gerado worked under the control of Skillpower and (5) Skillpower is a
highly-capitalized business venture.

ISSUE: w/n private respondent is an employee of ,Fuji Xerox (as the NLRC found) or of Skillpower, Inc.? private
respondent is an employee of Fuji Xerox and accordingly dismiss the petition for certiorari of Fuji Xerox.

HELD: Ruling: Contentions are without merit. Gerado is en employee of Fuji.

(1) he worked exclusively for petitioner. Indeed, he was recruited by Skillpower, Inc. solely for assignment to Fuji Xerox
to work in the latters Xerox Copier Project. Once employed, Garado was never assigned to any other client of Skillpower,
Inc. In fact, although under the agreement Skillpower, Inc. was supposed to provide only temporary services, Skilipower,
Inc. actually supplied Fuji Xerox the labor which the latter needed for its Xerox Copier Project for seven (7) years, from
1977 to 1984.

The contract signed by Fuji which state that private respondents status was that of a contract worker for a definite period
(6months) to be terminated automatically afterwards without necessity of any notice and without entitling the respondent
separation pay. That the termination of the contract or any renewal or extension thereof did not entitle him to become an
employee of the client and the latter was not under any obligation to appoint him as such, notwithstanding the total duration
of the contract or any extension or renewal thereof.

This is nothing but a crude attempt to circumvent the law and undermine the security of tenure of private respondent by
employing workers under six-month contracts which are later extended indefinitely through renewals. Article 106 of the
Labor Code is precisely designed to prevent such a result.)

(2) The job of Gerado may not generate income directly to Fuji but it is necessary in their products and promotion of the
company's public image. The determination of the existence of an employer-employee relationship is defined by law
according to the facts of each case, regardless of the nature of the activities involved.

(3) The letters of the legal and industrial relations officer of Fuji and the union president played the dismissal of the
employee, the order of dismissal was issued as a mere obedience to the decision of petitioner.

(4) The Rules to Implement of the Labor Code, Book III, Rule VIII, 8, provide that there is job contracting when the
following conditions are fulfilled:
 (1) The contractor carries on an independent business and undertakes the contract work on his own account under
his own responsibility according to his own manner and method, free from the control and direction of his employer
or principal in all matters connected with the performance of the work except as to the results thereof; and

(2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises,
and other materials which are necessary in the conduct of his business.

Otherwise, according to Art. 106 of the Labor Code,

There is labor-only contracting where the person supplying workers to an employer does not have substantial capital
or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited
and placed by such persons are performing activities which are directly related to the principal business of such
employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who
shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.

(5) There is an agreement between Fuji and Skillpower that Skillpower has no control over the workers they supplied with
Fuji.

Labor Law; Employer-Employee Relationship; Labor-Only Contracting; Security of Tenure; Employment of workers
provided by a labor-only contractor to a client under six-month contracts whichrenewals is nothing but a crude attempt
to circumvent the law and undermine the security of tenure of such employees.Private respondent was made to understand
that he was an employee of Skillpower, Inc., and not of the client to which he was assigned. Therefore, the termination of
the contract or any renewal or extension thereof did not entitle him to become an employee of the client and the latter was
not under any obligation to appoint him as such, notwithstanding the total duration of the contract or any extension or
renewal thereof. This is nothing but a crude attempt to circumvent the law and undermine the security of tenure of private
respondent by employing workers under six-month contracts which are later extended indefinitely through renewals.

Same; Same; Same; Same; The determination of the existence of an employer-employee relationship is defined by law
according to the facts of each case, regardless of the nature of the activities involved.It is wrong to say that if a task is
not directly related to the employers business, or it falls under what may be considered house-keeping activities, the one
performing the task is a job contractor. The determination of the existence of an employer-employee relationship is defined
by law according to the facts of each case, regardless of the nature of the activities involved.

Same; Same; Same; Same; Words and Phrases; The phrase substantial capital and investment in the form of tools,
equipment, machineries, work premises and other materials which are necessary in the conduct of his business clearly
contemplates tools, equipment, etc., which are directly related to the service a job contractor is being contracted to
render.Petitioner Fuji Xerox argues that Skillpower, Inc. had typewriters and service vehicles for the conduct of its
business independently of the petitioner. But typewriters and vehicles bear no direct relationship to the job for which
Skillpower, Inc. contracted its service of operating copier machines and offering copying services to the public. The fact is
that Skillpower, Inc. did not have copying machines of its own. What it did was simply to supply manpower to Fuji Xerox.
The phrase substantial capital and investment in the form of tools, equipment, machineries, work premises, and other
materials which are necessary in the conduct of his business, in the Implementing Rules clearly contemplates tools,
equipment, etc., which are directly related to the service it is being contracted to render. One who does not have an
independent business for undertaking the job contracted for is just an agent of the employer.

115. ESCARIO VS NLRC

FACTS: Private respondents California Marketing Co., Inc. (CMC) is a domestic corporation principally engaged in
themanufacturing of food products and distribution of such products to wholesalers and retailers. Privaterespondent Donna
Louis Advertising and Marketing Associates, Inc. is a duly registered promotionalfirm.Petitioners alleged that they were
employed by CMC as merchandisers. They alleged that the hiring,control and supervision of workers and the payment of
the salaries were all covered by CMC throughits agent D.L Admark in order CMC to avoid its liability under the law.
Petitioners filed a case againstCMC before the labor arbiter for regularization of their employment status.During the
pendency of the case, D.L Admark terminated the services of the petitioners. Thecomplaint was amended to include alleged
dismissal. CMC filed a motion to implead as partydefendantD.L Admark, the latter filed a motion to intervene. Both motions
were granted. CMC deniedbeing petitioners employer while D.L Admark asserted it is the employer of the petitioners.The
labor arbiter found petitioners as employees of CMC as they were engaged in activities that arenecessary and desirable in
the usual business/trade of CMC. On appeal, the NLRC set aside the laborarbiters decision. But ordered the reinstatement
of the petitioners in D.L Admark petitioners filed amotion for consideration before the NLRC which was denied for lack of
merit. Hence the petition.

ISSUE: Whether or not D.L Admark is a labor-only contractor or as independent contractor.

HELD: The Supreme Court denied the petition.

There is labor-only contracting when the contractor or subcontractor merely recruits, supplies orplaces workers to perform
a job, work or service for a principal. In labor only contracting, the followingelements are present:

1. the person supplying workers to an employer does not have substantial capital or investment in theform of tools,
equipment, machineries, wok premise, among other tools

2. the workers recruited and placed by such person performing activities which are directly related to theprincipal
business of the employer.

In contract, there is permissible job contracting when a principal agrees to put out or farm out with acontractor or a
subcontractor the performance/completion of a specific job, work or services within adefinite or predetermined period,
regardless of whether such job/services is to be performed orcompleted within or outside the premises of the principal. In
this arrangement, the followingconditions must concur.

1. The contractor carries on a distinct and independent business and undertakes the contract work on hisaccount under
the responsibility according to his own manual and methods, free from the control anddirection of his employer or principal
in all matters connected with the performance of his employerwork except as to the results thereof; and

2. The contractor has substantial capital / investment which are necessary in the conduct of his business.

The court reiterated that it is not enough to show substantial capitalization on investment. In additionthe following factors
need be consideredwhether the contractor is carrying on an independent businessthe nature and extent of the workthe skill
requiredthe term and duration of the relationshipthe right to assign the performance of specified pieces of workthe control
and supervision of the workersthe power of the employer with respect to the hiring, firing and payment of workers of the
contractorthe control of the premises the duty to supply premises, tools, appliances, materials and labormode, manner and
terms of payment. Based on the foregoing criteria, the court found that D.L Admark is a legitimate independentcontractor.
Applying the four-fold test, D.L Admark was found to be the employer of the petitioners.The Supreme Court affirmed the
NLRCs ruling.
116. People vs. Panis,142 SCRA

FACTS: Serapio Abug was charged with illegal recruitment. His defense was that the informations filed against him did
not constitute an offense because in each of the four informations filed against him, each denote that he was only recruiting
one person whereas the statute requires two or morepersons ISSUE: Determination of the proper interpretation of Art
13(b) of PD 442/ Labor Code:

b) Recruitment and placement' refers to any act of canvassing, enlisting, contracting,transporting, hiring, or
procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or
abroad, whether for profit or not: Provided, That any person or entity which, in any manner, offers or promises for
a fee employment to two or more persons shall be deemed engaged in recruitment and placement.

The view of the private respondents is that to constitute recruitment and placement, all the acts mentioned in this article
should involve dealings with two or mre persons as an indispensable requirement. On the other hand, the petitioner argues
that the requirement of two or more persons is imposed only where the recruitment and placement consists of an offer or
promise of employment to such persons and always in consideration of a fee. The other acts mentioned in the body of the
article may involve even only one person and are not necessarily for profit.

HELD: the proviso was intended neither to impose a condition on the basic rule nor to provide an exception thereto but
merely to create a presumption. The presumption is that the individual or entity is engaged in recruitment and placement
whenever he or it is dealing with two or more persons to whom, in consideration of a fee, an offer or promise of employment
is made in the course of the "canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers. "
The specification of two or more persons is not to create a condition prior to filing but rather itstates a presumption that the
individual is engaged in recruitment in consideration of a fee, however thenumber of persons is not an essential ingredient
to the act of recruitment or placement, and it will stillqualify even if only one person has been involved

the interpretation here adopted should give more force to the campaign against illegal recruitment and placement, which
has victimized many Filipino workers seeking a better life in a foreign land, and investing hard- earned savings or even
borrowed funds in pursuit of their dream, only to be awakened to the reality of a cynical deception at the hands of their
own countrymen.

117. JMM PROMOTION AND MANAGEMENT VS CA

FACTS: Following the much-publicized death of Maricris Sioson in 1991, former President Corazon C. Aquino ordered a
total ban against the deployment of performing artists to Japan and other foreign destinations. The ban was, however,
rescinded after leaders of the overseas employment industry promised to extend full support for a program aimed at
removing kinks in the system of deployment. In its place, the government, through the Secretary of Labor and Employment,
subsequently issued Department Order No. 28, creating the Entertainment Industry Advisory Council (EIAC), which was
tasked with issuing guidelines on the training, testing certification and deployment of performing artists abroad.
Pursuant to the EIAC's recommendations,[1] the Secretary of Labor, on January 6, 1994, issued Department Order No.
3 establishing various procedures and requirements for screening performing artists under a new system of training, testing,
certification and deployment of the former. Performing artists successfully hurdling the test, training and certification
requirement were to be issued an Artist's Record Book (ARB), a necessary prerequisite to processing of any contract of
employment by the POEA. Upon request of the industry, implementation of the process, originally scheduled for April 1,
1994, was moved to October 1, 1994.
Federation of Entertainment Talent Managers of the Philippines (FETMOP), on January 27, 1995 filed a class suit assailing
these department orders, principally contending that said orders 1) violated the constitutional right to travel; 2) abridged
existing contracts for employment; and 3) deprived individual artists of their licenses without due process of law. FETMOP,
likewise, averred that the issuance of the Artist Record Book (ARB) was discriminatory and illegal and "in gross violation
of the constitutional right... to life liberty and property." Said Federation consequently prayed for the issuance of a writ of
preliminary injunction against the aforestated orders.
ISSUE: w/n the department order 03 is valid? YES.(POLICE POWER/SEC 18 ART 2/EQUAL PROTECTION CLAUSE)
HELD:
1. The latin maxim salus populi est suprema lex embodies the character of the entire spectrum of public laws aimed at
promoting the general welfare of the people under the State's police power. As an inherent attribute of sovereignty which
virtually "extends to all public needs,"[2] this "least limitable"[3] of governmental powers grants a wide panoply of
instruments through which the state, as parens patriae gives effect to a host of its regulatory powers.
Pursuant to the alarming number of reports that a significant number of Filipina performing artists ended up as
prostitutes abroad (many of whom were beaten, drugged and forced into prostitution), and following the deaths of a number
of these women, the government began instituting measures aimed at deploying only those individuals who met set standards
which would qualify them as legitimate performing artists. In spite of these measures, however, a number of our countrymen
have nonetheless fallen victim to unscrupulous recruiters, ending up as virtual slaves controlled by foreign crime syndicates
and forced into jobs other than those indicated in their employment contracts. Worse, some of our women have been forced
into prostitution.
The welfare of Filipino performing artists, particularly the women was paramount in the issuance of Department Order
No. 3. Short of a total and absolute ban against the deployment of performing artists to "high risk" destinations, a measure
which would only drive recruitment further underground, the new scheme at the very least rationalizes the method of
screening performing artists by requiring reasonable educational and artistic skills from them and limits deployment to only
those individuals adequately prepared for the unpredictable demands of employment as artists abroad. It cannot be gainsaid
that this scheme at least lessens the room for exploitation by unscrupulous individuals and agencies.
In any event, apart from the State's police power, the Constitution itself mandates government to extend the fullest
protection to our overseas workers. The basic constitutional statement on labor, embodied in Section 18 of Article II of the
Constitution provides:
2. Sec. 18. The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote
their welfare. The State shall afford full protection to labor, local and overseas, organized and unorganized and promote full
employment and equality of employment opportunities for all.
Obviously, protection to labor does not indicate promotion of employment alone. Under the welfare and social justice
provisions of the Constitution, the promotion of full employment, while desirable, cannot take a backseat to the
government's constitutional duty to provide mechanisms for the protection of our workforce, local or overseas.
118. ESALYN ECHAVES VS BONTO-PEREZ
Chavez is a dancer who was contracted by Centrum Placement & Promotions Corporation to perform in Japan for 6 months.
The contract was for $1.5k a month, which was approved by POEA. After the approval of said contract, Chavez entered
into a side contract reducing her salary with her Japanese employer through her local manager-agency (Jaz Talents
Promotion). The salary was reduced to $500 and $750 was to go to Jaz Talents. In February 1991 (two years after the
expiration of her contract), Chavez sued Centrum Placement and Jaz Talents for underpayment of wages before the POEA.
The POEA ruled against her. POEA stated that the side agreement entered into by Chavez with her Japanese employer
superseded the Standard Employment Contract; that POEA had no knowledge of such side agreement being entered into;
that Chavez is barred by laches for sleeping on her right for two years.
ISSUE: Whether or not Chavez is entitled to relief.
HELD: Yes. The SC ruled that the managerial commission agreement executed by Chavez to authorize her Japanese
Employer to deduct her salary is void because it is against our existing laws, morals and public policy. It cannot supersede
the standard employment contract approved by the POEA with the following stipulation appended thereto:
It is understood that the terms and conditions stated in this Employment Contract are in conformance with the Standard
Employment Contract for Entertainers prescribed by the POEA under Memorandum Circular No. 2, Series of 1986. Any
alterations or changes made in any part of this contract without prior approval by the POEA shall be null and void;
The side agreement which reduced Chavezs basic wage is null and void for violating the POEAs minimum employment
standards, and for not having been approved by the POEA. Here, both Centrum Placement and Jaz Talents are solidarily
liable.
Laches does not apply in the case at bar. In this case, Chavez filed her claim well within the three-year prescriptive period
for the filing of money claims set forth in Article 291 of the Labor Code. For this reason, laches is not applicable.
Book V, Rule II
Sec. 1. Employment Standards. The Administration shall determine, formulate and review employment
standards in accordance with the market development and welfare objectives of the overseas employment
program and the prevailing market conditions.
Sec. 2. Minimum Provisions for Contract. The following shall be considered the minimum requirements
for contracts of employment:
a. Guaranteed wages for regular working hours and overtime pay for services rendered
beyond regular working hours in accordance with the standards established by the
Administration;
xxx xxx xxx
Sec. 3. Standard Employment Contract. The administration shall undertake development and/or periodic
review of region, country and skills specific employment contracts for landbased workers and conduct
regular review of standard employment contracts (SEC) for seafarers. These contracts shall provide for
minimum employment standards herein enumerated under Section 2, of this Rule and shall recognize the
prevailing labor and social legislations at the site of employment and international conventions. The SEC
shall set the minimum terms and conditions of employment. All employers and principals shall adopt the
SEC in connection with the hiring of workers without prejudice to their adoption of other terms and
conditions of employment over and above the minimum standards of the Administration. (Emphasis
supplied.)
and
BOOK VI, RULE I
Sec. 2. Grounds for suspension/cancellation of license.
xxx xxx xxx
f. Substituting or altering employment contracts and other documents approved and verified by the
Administration from the time of actual signing thereof by the parties up to and including the period of
expiration of the same without the Administration's approval.
xxx xxx xxx
(Emphasis supplied.)
Clearly, the basic salary of One Thousand Five Hundred U.S. Dollars (US$1,500.00) guaranteed to petitioner
under the parties' standard employment contract is in accordance with the minimum employment standards with
respect to wages set by the POEA, Thus, the side agreement which reduced petitioner's basic wage to Seven
Hundred Fifty U.S. Dollars (US$750.00) is null and void for violating the POEA's minimum employment
standards, and for not having been approved by the POEA. Indeed, this side agreement is a scheme all too
frequently resorted to by unscrupulous employers against our helpless overseas workers who are compelled to
agree to satisfy their basic economic needs.

Secondly. The doctrine of laches or "stale demands"' cannot be applied to petitioner. Laches has been defined as
the failure or neglect for an unreasonable and unexplained length time to do that which, by exercising due
diligence, could or should have been done earlier, 7 thus giving rise to a presumption that the party entitled to
assert it either has abandoned or declined to assert it.8 It is not concerned with mere lapse of time; the fact of delay,
standing alone, is insufficient to constitute laches.9
The doctrine of laches is based upon grounds of public policy which requires, for the peace of society, the
discouragement of stale claims, and is principally a question of the inequity or unfairness of permitting a right or
claim to be enforced or asserted. 10 There is no absolute rule as to what constitutes laches; each case is to be
determined according to its particular circumstances. The question of laches is addressed to the sound discretion of
the court, and since it is an equitable doctrine, its application is controlled by equitable considerations. It cannot be
worked to defeat justice or to perpetrate fraud and injustice.

119. PANGANIBAN VS TARA TRADING

FACTS:In November 2005, petitioner was hired by respondent Tara Trading Shipmanagement, Inc.(Tara),in behalf of its
foreign principal, respondent Shinline SDN BHD(Shinline)to work as an Oiler on board MV Thailine 5 with a monthly
salary of US$409.00.

Sometime in April 2006, petitioner began exhibiting signs of mental instability. He was repatriated onMay 24, 2006for
further medical evaluation and management.

Petitioner was referred by respondents to the Metropolitan Medical Centerwhere he was diagnosed to be suffering from
brief psychotic disorder.

Despite his supposed total and permanent disability and despite repeated demands for payment of disability compensation,
respondents allegedly failed and refused to comply with their contractual obligations.

Hence, petitioner filed a Complaint against respondents praying for the payment of US$60,000.00 as total and permanent
disability benefits, reimbursement of medical and hospital expenses, moral and exemplary damages, and attorneys fees
equivalent to 10% of total claims.

Respondents, on the other hand, maintained that petitioner requested for an early repatriation and arrived at the point of
hire on May 24, 2006; that while on board the vessel, he confided to a co-worker, Henry Santos, that his eating and
sleeping disorders were due to some family problems; that Capt. Zhao, the master of the vessel, even asked him if he
wanted to see a doctor; that he initially declined; that on May 22, 2006, petitioner approached Capt. Zhao and requested
for a vacation and early repatriation; that the said request was granted; that upon arrival, petitioner was subjected to a
thorough psychiatric evaluation; and that after a series of check-ups, it was concluded that his illness did not appear to be
work-related.Respondents argued that petitioner was not entitled to full and permanent disability benefits under the
Philippine Overseas Employment Administration Standard Employment Contract(POEA SEC)because there was no
declaration from the company-designated physician that he was permanently and totally disabled and that the claim for
damages was without basis as no bad faith can be attributed to them.

On September 17, 2007, the LA ruled in favor of the petitioner.

Respondents appealed to the NLRC. OnMarch 25, 2008, theNLRC affirmedthe decision of the LA. The appeal of
respondents was dismissed for lack of merit. Respondents filed a motion for reconsideration but it was denied in a
resolution datedApril 30, 2008.

Aggrieved, respondents filed a Petition for Certiorari with prayer for the issuance of a writ of preliminary injunction
and/or temporary restraining orderwith the CA.

OnOctober 29, 2008, theCAreversedthe decision of the NLRC. Petitioners Motion for Reconsideration was denied by the
CA in its Resolution dated March 4, 2009. Hence, this petition.
ISSUES:

Whether or not the CA is correct in denying petitioners entitlement to full and total disability benefits amounting to
US$60,000.00 and attorneys fees in the amount of US$6,000.00.
HELD:

LABOR LAW
Although strict rules of evidence are not applicable in claims for compensation and disability benefits, the Court cannot
just disregard the provisions of the POEA SEC. Significantly, a seaman is a contractual and not a regular employee. His
employment is contractually fixed for a certain period of time. Petitioner and respondents entered into a contract of
employment. It was approved by the POEA onOctober 25, 2005and, thus, served as the law between the parties.
Undisputedly, Section 20-B of the POEA Amended Standard Terms and Conditions Governing the Employment of
Filipino Seafarers on Board Ocean-Going Vessels (POEA-SEC) provides for compensation and benefits for injury or
illness suffered by a seafarer. It says that, in order to claim disability benefits under the Standard Employment Contract, it
is the company-designated physician who must proclaim that the seaman suffered a permanent disability, whether total or
partial, due to either injury or illness, during the term of the latters employment.In German Marine Agencies, Inc. v.
NLRC, the Courts discussion on the seafarers claim for disability benefits is enlightening. Thus:

In order to claim disability benefits under the Standard Employment Contract, it is the company-designated physician who
must proclaim that the seaman suffered a permanent disability, whether total or partial, due to either injury or illness,
during the term of the latters employment. There is no provision requiring accreditation by the POEA of such physician.
In fact, aside from their own gratuitous allegations, petitioners are unable to cite a single provision in the said contract in
support of their assertions or to offer any credible evidence to substantiate their claim. If accreditation of the company-
designated physician was contemplated by the POEA, it would have expressly provided for such a qualification, by
specifically using the term accreditation in the Standard Employment Contract, to denote its intention. For instance, under
the Labor Code, it is expressly provided that physicians and hospitals providing medical care to an injured or sick
employee covered by the Social Security System or the Government Service Insurance System must be accredited by the
Employees Compensation Commission. It is a cardinal rule in the interpretation of contracts that if the terms of a contract
are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall
control.There is no ambiguity in the wording of the Standard Employment Contract the only qualification prescribed for
the physician entrusted with the task of assessing the seamans disability is that he be company-designated. When the
language of the contract is explicit, as in the case at bar, leaving no doubt as to the intention of the drafters thereof, the
courts may not read into it any other intention that would contradict its plain import.

In this case, the findings of respondents designated physician that petitioner has been suffering from brief psychotic
disorder and that it is not work-related must be respected.

The Court commiserates with the petitioner, but absent substantial evidence from which reasonable basis for the grant of
benefits prayed for can be drawn, the Court is left with no choice but to deny his petition, lest an injustice be caused to the
employer. Otherwise stated, while it is true that labor contracts are impressed with public interest and the provisions of the
POEA SEC must be construed logically and liberally in favor of Filipino seamen in the pursuit of their employment on
board ocean-going vessels, still the rule is that justice is in every case for the deserving, to be dispensed with in the light
of established facts, the applicable law, and existing jurisprudence.

Lastly, it appears premature at this time to consider petitioners disability as permanent and total because the severity of his
ailment has not been established with finality to render him already incapable of performing the work of a seafarer. In
fact, the medical expert termed his condition asbriefpsychotic disorder. The Court also takes note, as the CA correctly did,
that petitioner did not finish his treatment with the company-designated physician, hence, there is no final evaluationyeton
petitioner.
All told, no reversible error was committed by the CA in rendering the assailed Decision and issuing the questioned
Resolution.

BOOK ONE - PRE-EMPLOYMENT

PART II ILLEGAL RECRUITMENT (ELEMENTS)

120. ATCI OVERSEAS CORPORATION, AMALIA G. IKDAL and MINISTRY OF PUBLIC HEALTH-KUWAIT
Petitioners, vs. MA. JOSEFA ECHIN, Respondent. G.R. No. 178551 October 11, 2010

FACTS:

Respondent Echin was hired by petitioner ATCI in behalf of its principal co-petitioner, Ministry of Public Health
of Kuwait, for the position of medical technologist under a two-year contract with a monthly salary of US$1,200.00. Under
the MOA,1 all newly-hired employees undergo a probationary period of one (1) year and are covered by Kuwaits Civil
Service Board Employment Contract No. 2. Within a year, Respondent was terminated for not passing the probationary
period which was under the Memorandum of Agreement. Ministry denied respondents request for reconsideration and she
returned to the Philippines shouldering her own fair. Respondent filed with the National Labor Relations Commission
(NLRC) a complaint against ATCI for illegal dismissal. Labor Arbiter rendered judgment in favor of respondent and ordered
ATCI to pay her $3,600.00, her salary for the three months unexpired portion of the contract. ATCI appealed Labor Arbiters
decision, however, NLRC affirmed the latters decision and denied petitioner ATCIs motion for reconsideration. Petitioner
appealed to the Court Appeals contending that their principal being a foreign government agency is immune from suit, and
as such, immunity extended to them. Appellate Court affirmed NLRCs decision. It noted that under the law, a private
employment agency shall assume all responsibilities for the implementation of the contract of employment of an overseas
worker; hence, it can be sued jointly and severally with the foreign principal for any violation of the recruitment agreement
or contract of employment. Petitioners motion for reconsideration was denied; hence, this present petition.

Issue:
Whether or not petitioners be held liable considering that the contract specifically stipulates that respondents
employment shall be governed by the Civil Service Law and Regulations of Kuwait.

Whether or not petitioners be held liable under Art. 38 which falls under prohibited practices enumerated under Art.
34 of PD 442.

Ruling:

Court denied the petition. According to RA 8042: The obligations covenanted in the recruitment agreement entered
into by and between the local agent and its foreign principal are not coterminous with the term of such agreement so that if
either or both of the parties decide to end the agreement, the responsibilities of such parties towards the contracted employees
under the agreement do not at all end, but the same extends up to and until the expiration of the employment contracts of
the employees recruited and employed pursuant to the said recruitment agreement. In international law, the party who wants
to have a foreign law applied to a dispute or case has the burden of proving the foreign law. Unfortunately, petitioner did
not prove the pertinent Saudi laws on the matter; thus, the International Law doctrine of presumed-identity
approach or processual presumption comes into play. Where a foreign law is not pleaded or, even if pleaded, is not proved,
the presumption is that foreign law is the same as ours. Thus, we apply Philippine labor laws in determining the issues
presented before us.
121. ROBERTO RAVAGO, petitioner vs ESSO EASTERN MARINE, LTD & TRANS-GLOBAL MARITIME
AGENCY, INC., respondent, [G.R. No. 158324. March 14, 2005]

FACTS:

The respondent Esso is a foreign company based in Singapore and engaged in maritime commerce. It is represented
in the Philippines by its manning agent and co-respondent Trans-Global, a corporation organized under the Philippine laws.
Roberto Ravago was hired by Trans-Global to work as a seaman on board various Esso vessels. On February 13, 1970,
Ravago commenced his duty as S/N wiper on board the Esso Bataan under a contract that lasted until February 10, 1971.
Thereafter, he was assigned to work in different Esso vessels where he was designated diverse tasks, such as oiler, then
assistant engineer. He was employed under a total of 34 separate and unconnected contracts, each for a fixed period, by
three different companies, namely, Esso Tankers, Inc. (ETI), EEM and Esso International Shipping (Bahamas) Co., Ltd.
(EIS), Singapore Branch. Ravago worked with Esso vessels until August 22, 1992, a period spanning more than 22 years.

Shortly after completing his latest contract with Esso, Ravago was granted a vacation leave with pay. Preparatory
to his embarkation under a new contract, he was ordered to report for a Medical Pre-Employment Examination, which,
according to the records, he passed. He, likewise, attended a Pre-Departure Orientation Seminar conducted by the Capt. I.P.
Estaniel Training Center, a division of Trans-Global.

One night, a stray bullet hit Ravago on the left leg while he was waiting for a bus ride in Cubao, Quezon City. He
fractured his left proximal tibia and was hospitalized at the Philippine Orthopedic Hospital. Ravagos wife, Lolita, informed
the petitioners of the incident for purposes of availing medical benefits. As a result of his injury, Ravagos doctor opined
that he would not be able to cope with the job of a seaman and suggested that he be given a desk job. For this reason, the
company physician found him to have lost his dexterity, making him unfit to work once again as a seaman. Consequently,
instead of rehiring Ravago, Esso paid him his Career Employment Incentive Plan (CEIP) as of and his final tax refund.
However, Ravago filed a complaint for illegal dismissal with prayer for reinstatement, backwages, damages and attorneys
fees against Trans-Global and Esso with the POEA Adjudication Office.

Respondents denied that Ravago was dismissed without notice and just cause. Rather, his services were no longer
engaged in view of the disability he suffered which rendered him unfit to work as a seafarer. This fact was further validated
by the company doctor and Ravagos attending physician. They averred that Ravago was a contractual employee and was
hired under 34 separate contracts by different companies.

Ravago insisted that he was fit to resume pre-injury activities and that he was not a mere contractual employee
because the respondents regularly and continuously rehired him for 23 years and, for his continuous service, was awarded
a CEIP payment upon his termination from employment.

The respondents, on the other hand, asseverate that there is no law or administrative rule or regulation imposing an
obligation to rehire a seafarer upon the completion of his contract. Their refusal to secure the services of the petitioner after
the expiration of his contract can never be tantamount to a termination. The respondents aver that the petitioner is not entitled
to backwages, not only because it is without factual justification but also because it is not warranted under the law.

ISSUE:

Whether or not petitioner Ravago is a regular employee of respondent Esso.

Whether or not petitioners be held liable under Art. 38 which falls under prohibited practices enumerated under Art. 34 of
PD 442.

HELD:

The SC held that seafarers are contractual, not regular, employees. Seamen and overseas contract workers are not covered
by the term regular employment as defined in Article 280 of the Labor Code.
Petitioners employment has automatically ceased upon the expiration of their contracts of enlistment (COE). Since there
was no dismissal to speak of, it follows that petitioner is not entitled to reinstatement or payment of separation pay or
backwages, as provided by law. [43] Petitioner cannot be considered as a regular employee notwithstanding that the work he
performs is necessary and desirable in the business of respondent company. Thus, even with the continued re-hiring by
respondent company of petitioner to serve as Radio Officer onboard Bergesens different vessels, this should be interpreted
not as a basis for regularization but rather a series of contract renewals sanctioned under the doctrine set down by the
second Millares case. If at all, petitioner was preferred because of practical considerations namely, his experience and
qualifications. However, this does not alter the status of his employment from being contractual.

Petition is hereby DENIED. The assailed Decision dated August 28, 2002 of the Court of Appeals is hereby AFFIRMED.

122. MARCIAL GU-MIRO, petitioner, vs. ROLANDO C. ADORABLE and BERGESEN D.Y.
MANILA, respondents. [G.R. No. 160952. August 20, 2004]

FACTS:
Petitioner Marcial Gu-Miro was formerly employed as a Radio Officer of respondent Bergesen D.Y. Philippines, which
acted for and in behalf of its principal Bergesen D.Y. ASA, on board its different vessels. A Certification dated April 14,
1998 was issued by Bergesen D.Y. Philippines, Inc.s President and General Manager Rolando C. Adorable showing that
petitioner served in the company on board its vessels starting 1988.[2] The case before us involves an employment contract
signed by petitioner to commence service on board the M/V HEROS, which stipulated a monthly salary of US$929.00 for
a period of eight (8) months. It also provided for overtime pay of US$495.00 per month and vacation leave with pay in the
amount of US$201.00 per month equivalent to six and a half days. After the expiration of petitioners contract in December
1996, the same was renewed by respondent company until September 9, 1997, as stated in the Certification issued by
Bergesen D.Y. Philippines, Inc.
Petitioners services were terminated due to the installation of labor saving devices which made his services redundant.
Upon his forced separation from the company, petitioner requested that he be given the incentive bonus plus the additional
allowances he was entitled to. Respondent company, however, refused to accede to his request. And because of the
respondents refusal, petitioner filed a complaint with the NLRC, Regional Arbitration Branch of Cebu, Petitioner argued
that aside from the incentive bonus and additional allowances that he is entitled, he should be considered as a regular
employee of respondent company, having been employed onboard the latters different vessels for the span of 10 years and
thus, entitled to back wages and separation pay, moral and exemplary damages as well as attorneys fees.
The complaint was provisionally dismissed by the NLRC due to the failure of petitioner to file the required position
paper. Petitioner re-filed the complaint on March 2, 2000 accordingly. However, the Labor Arbiter dismissed the case for
lack of merit stating that the incentive bonus or reemployment bonus are benefits not found in the POEA approved contract.
Moreover, claims for moral and exemplary damages as well as attorneys fees are likewise denied.
In order that a seafarer, like the complainant, be entitled to reemployment/incentive bonus, he must satisfy all of the
following requirements, to wit:

1) He must be employed in a vessel under a principal who is a member of the reemployment bonus scheme;

2) He must have been an officer of the principal members vessel subject to the additional conditions stated in page 2 of the
aforementioned internal memorandum; and

3) After serving in a principal-members vessel, he must be reemployed in another or the same principal-members vessel.

On appeal to NLRC, the decision of Labor Arbiter set aside and ordered respondents to pay petitioner the amount of
US$594.56
Issue:
Whether or not, seafarers are considered regular employees.

Whether or not petitioners be held liable under Art. 38 which falls under prohibited practices enumerated under Art. 34 of
PD 442.

Held:
No. Petitioner cannot be considered as a regular employee notwithstanding that the work he performs is necessary and
desirable in the business of the respondent company. The exigencies of the work of seafarers necessitates that they be
employed on a contractual basis. Thus, even with the continued re-hiring by respondent company of petitioner to serve as
radio officer onboard the formers different vessels, this should be interpreted not as a basis for regularization but rather a
series of contract renewals.

Petition is GRANTED IN PART. The Decision of the Court of Appeals in CA-G.R. SP No. 66131 dated May 29, 2003 is
MODIFIED in that the award of incentive bonus is increased from US$1189.12 to US$1,486.40. Petitioners claim that he
be declared a regular employee and awarded backwages and separation pay is DENIED for lack of merit.

123. OSM SHIPPING PHILIPPINES, INC., petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION (3rd Division) and FERMIN F. GUERRERO, respondents.
[G.R. No. 138193. March 5, 2003]

FACTS:

Private respondent was hired by Petitioner OSM for and in behalf of its principal, Phil Carrier Shipping Agency
Services Co. (PC-SLC) to board its vessel M/V [Princess] Hoa as a Master Mariner for a contract period of ten (10) months.
Under the said contract, his basic monthly salary is US$1,070.00, US$220.00 allowance, US$321.00 fixed overtime, US$89
vacation leave pay per month for x x x 44 hours f] work per week. He boarded the vessel on July 21, 1994 and complied
faithfully with the duties assigned to him.

Private respondent alleged that from the start of his work with M/V Princess Hoa, he was not paid any compensation
at all and was forced to disembark the vessel sometime in January 1995 because he cannot even buy his basic personal
necessities. For almost seven (7) months, i.e. from July 1994 to January 1995, despite the services he rendered, no
compensation or remuneration was ever paid to him. Hence, this case for illegal dismissal, [non-payment] of salaries,
overtime pay and vacation pay.

Petitioner OSM, for its part, alleged that on July 26, 1994, Concorde Pacific, an American company which owns
M/V Princess Hoa, then a foreign registered vessel, appointed
Philippine Carrier Shipping Agency Services Co. (PC-SASCO) as ship manager particularly to negotiate, transact and deal
with any third persons, entities or corporations in the planning of crewing selection or determination of qualifications of
Filipino Seamen. On the same date, [Petitioner] OSM entered into a Crew Agreement with PC-SASCO for the purpose of
processing the documents of crew members of M/V Princess Hoa. The initial plan of the [s]hip-owner was to use the vessel
in the overseas trade, particularly the East Asian Growth Area. Thereafter, the contract of [private respondent] was processed
before the POEA on September 20, 1994.

OSM alleged further that the shipowner changed its plans on the use of the vessel. Instead of using it for overseas
trade, it decided to use it in the coastwise trade, thus, the crewmembers hired never left the Philippines and were merely
used by the shipowner in the coastwise trade. Considering that the M/V Princess Hoa was a foreign registered vessel and
could not be used in the coastwise trade, the shipowner converted the vessel to Philippine registry on September 28, 1994
by way of bareboat chartering it out to another entity named Philippine Carrier Shipping Lines Co. (PCSLC). To do this,
the shipowner through Conrado V. Tendido had to terminate its management agreement with x x x PC-SASCO on
September 28, 1994 by a letter of termination dated September 20, 1994. In the same letter of termination, the ship owner
stated that it has bareboat chartered out the vessel to said [PCSLC] and converted it into Philippine registry. Consequently,
x x x PC-SASCO terminated its crew agreement with OSM in a letter dated December 5, 1994. Because of the bareboat
charter of the vessel to PCSLC and its subsequent conversion to Philippine registry and use in coastwise trade as well as to
the termination of the management agreement and crew agency agreement, a termination of contract ensued whereby
PCSLC, the bareboat charterer, became the disponent owner/employer of the crew.

Labor Arbiter (LA) Manuel R. Caday rendered a Decision[6] in favor of Private Respondent Guerrero. Petitioner and
its principal, Philippine Carrier Shipping Agency Services, Co. (PC-SASCO), were ordered to jointly and severally pay
Guerrero his unpaid salaries and allowances, accrued fixed overtime pay, vacation leave pay and termination pay. The
Decision held that there was a constructive dismissal of private respondent, since he had not been paid his salary for seven
months. It also dismissed petitioners contention that there was a novation of the employment contract.
On appeal, the NLRC (Third Division) affirmed the LAs Decision, with a modification as to the amount of liability.
On January 28, 1999, petitioner filed with the CA a Petition[7] to set aside the NLRC judgment. The petition was dismissed,
because petitioner had allegedly failed to comply with the requirements of Section 3 of Rule 46 of the Rules of Court.
Specifically, petitioner had attached to its Petition, not a duplicate original or a certified true copy of the LAs Decision, but
a mere machine copy thereof. Further, it had not indicated the actual address of Private Respondent Fermin F. Guerrero.[8]
Hence, this Petition.[9]
ISSUE:

1)Procedural Whether or not, CA was correct in dismissing the petition for failure to comply with the said requirement?

2)Substantive Whether or not, OSM is jointly liable with PC-SASCO, as its agent. YES

(3) Whether or not petitioners be held liable under Art. 38 which falls under prohibited practices enumerated under Art. 34
of PD 442.

HELD:

(1) Sec. 3 rule 46 of the ROC requires that a duplicate original or certified true copy of only the questioned decision
should be attached to the petition and not all supporting papers. Since the LAs decision was not questioned ruling,
a machine copy of it would suffice. The duplicate original of the questioned decision of the NLRC should be
attached, and this was complied with. However, even if petitioners procedural contention was correct, this Court
still ruled for Guerrero on the merits. To remand this case to the CA would further delay the recovery of wages.

(2) On behalf of its principal, OSM does not deny hiring Guerrero as master mariner. Petitioner was the legitimate
manning agent of PS-SASCO and it was allowed to recruit, hire and deploy seamen on board the vessel.
It argues that since Guerrero was never deployed overseas, his employment contract became ineffective because its object
was allegedly absent. Employment contract like any contract is perfected upon the concurrence of essential elements
provided by law.

- Art. 38. Illegal Recruitment. (a) Any recruitment activities, including the prohibited enumerated under Article 34
of this code (PD 442), to be undertaken by non-licensees or non-holders of authority, shall be deemed illegal and
punishable under Article 39 of this code. The Department of labor and Employment or any law enforcement officer
may initiate complaints under this Article.

124. PEOPLE OF THE PHILIPPINES, appellee, vs. VICENTA MEDINA LAPIS, ANGEL MATEO,
AIDA DE LEON (at large) and JEAN AM-AMLAW (at large), appellants.
G.R. Nos. 145734, October 15, 2002
 Illegal recruiters prey on our gullible and impoverished people by inveigling them with false or fraudulent promises of
attractive employment in foreign shores. Such vultures deserve the full sanction of the law.

FACTS:

Complainants are husband and wife, residents of Baguio City. They made a living earning an average of P20,000.00
a month by selling fish and vegetables in a rented stall in said City, at least until March 24, 1998 when they closed shop for
reasons of attending to the demands of the promised jobs for them in Japan. Both categorically identified Jane Am-amlao
their co-vendor in Baguio City Market, as the person who approached them and ass1ured them that she knew a legal
recruiter, an ex-POEA employee, who had the capacity to send them both abroad. Jane Am-amlaw recruited complainants
and personally accompanied them on March 24, 1998 to meet the person she earlier referred to, or Aida de Leon, in the
latters apartment at No. 7280 J. Victor St., Pio del Pilar, Makati.

Aida de Leon as the person who arranged a meeting in her apartment on March 24, 1998 between complainants and
appellant Angel Mateo whom de Leon introduced as their contact person for Japan-bound workers. In said meeting, Mateo
represented himself as having the capacity to send people abroad and showed complainants various documents to convince
them of his legitimate recruitment operations. Convinced that Mateo had indeed the capacity to facilitate their employment
as an office worker and as a cook or mechanic in Japan, complainants, on that same day, handed Mateo P15,000.00 which
Mateo required them to pay for their processing fees. This was to be the first of a series of sums of money to be extracted
from complainants.

Complainants were able to positively identify Mateo in court as the contact person of de Leon and who collected
from them, from March 24, 1998 to June 23, 1998, sums of money for the alleged necessary expenses relative to the
promised jobs awaiting them in Japan in the total amount of P158,600.00. Complainants likewise categorically identified
Mateo as the same person whose authorization was needed for the recovery of P40,000.00 of the P45,000.00 they gave
Mateo who in turn deposited it to Sampaguita Travel Agency under his own name.

Complainants likewise positively identified appellant Vicenta Vicky Lapis in Court as the person introduced to
them by Mateo as his wife on April 29, 1998 at Maxs Restaurant in Makati when Lapis required complainants to
pay P49,240.00 for their plane tickets and travel taxes. Lapis is, in fact, only the live-in partner of Mateo. Lapis told
complainants that she was helping to speed up the process[ing] of their papers relative to the promised jobs awaiting them
in Japan. Complainants met again Lapis, who was with Mateo on May 2, 1998 at the Makati Restaurant, annex of Maxs
Restaurant, when Lapis assured them that Mateo could really send them abroad and even wrote in a piece of paper appellants
address at Phase I, Lot 14, Blk 13 Mary Cris Subd., Imus, Cavite. On May 17, 1998, complainants once more met Lapis
who was with Mateo, de Leon and de Leons husband in Baguio City at the house of Priscilla Marreos daughter. Both
appellants updated complainant as to the status of their paper and reiterated their promise that complainants would soon be
leaving for Japan, then collected from complainants unreceipted amount of P20,000.00. Complainants met again with Lapis,
who was again with Mateo, on May 19, 1998 at the Sampaguita Travel Agency. Mateo extracted P45,000.00 from
complainants and deposited it under his name. On that occasion, Perpetua wanted to ask from the Sampaguita Travel
Agencys employees where to pay the P45,000.00 but failed to do so because Lapis took her attention away from asking
while Mateo asked Melchor to hand over to him said sum.

Priscilla Marreo is the sister of Melchor who loaned complainants part of the P158,000.00 which appellants
extracted from complainant. Thus, she made herself present in most of the meetings between complainants and appellants
together with the two other accused where she witnessed the assurances and promises made by appellants relative to
complainants immediate departure for Japan and their corresponding demands of sums of money. The testimony of Priscilla
underscored the testimony of complainants showing that Am-amlaw, de Leon, Lapis and Mateo indeed corroborated and
confederated in the commission of illegal recruitment.

Regional Trial Court (RTC) of Makati City (Branch 138), finding them guilty beyond reasonable doubt of illegal recruitment
and estafa.

ISSUE:
Whether or not, accused are guilty beyond reasonable doubt for the crime of illegal recruitment.

HELD:
Yes. The trial court held that the evidence for the prosecution sufficiently established the criminal liability of appellants for
the crimes charged.

Evidence for the prosecution clearly established that both complainants were enticed by accused Mateo and were led to
believe that the latter has the capacity to send them for employment to Japan. Complainant Melchor Degsi and his wife
Perpetua Degsi both testified to this fact. Acting on their belief that indeed accused Mateo can deploy them to Japan,
amounts were disbursed by both complainants to accused Mateo to cover the processing and placement fees. The Court
finds the evidence presented by the prosecution sufficient to establish that accused Mateo violated Section 6 of Republic
Act No. 8042 when he demanded amounts for placement and processing fees but he failed to deploy both complainants. The
Court has a similar conclusion insofar as the accusation for estafa is concerned as the evidence shows accused Mateo knew
beforehand that he has no capacity to deploy both complainants abroad and that the enticement to work abroad was merely
a scheme or plan to exact money from both complainants. Deception was proven.

Insofar as the accused Lapis is concerned it is to be noted that the theory of the prosecution is that she acted in conspiracy
with her co-accused Mateo who is her live-in partner. Evidence for the prosecution shows that at least on three (3) occasions
accused Lapis was present when accused Mateo asked and received money from complainants in connection with their
intended employment in Japan. The Court concluded that accused Lapis has knowledge of the intention of her co-accused
Mateo in asking for money from both complainants. There was active participation on her part in the recruitment of both
complainants and in deceiving them about the capacity to secure employment. The Court believes that conspiracy was
established beyond reasonable doubt. Her defense of ignorance of the transaction cannot be considered given the positive
evidence presented by the prosecution which should prevail over her plain denial.

125. MILLARES V. NLRC

G.R. NO. 110524, JULY 29, 2002

FACTS:

Petitioner Douglas Millares was employed by private respondent ESSO International Shipping Company LTD.
through its local manning agency, private respondent Trans-Global Maritime Agency, Inc. as a machinist. In 1975, he was
promoted as Chief Engineer which position he occupied until he opted to retire in 1989.

On June 13, 1989, petitioner Millares applied for a leave of absence for the period July 9 to August 7, 1989 and
approve the same by the president. On June 21, 1989, petitioner Millares wrote G.S. Hanly, Operations Manager of Exxon
International Co., (now Esso International) through Michael J. Estaniel, informing him of his intention to avail of the
optional retirement plan under the Consecutive Enlistment Incentive Plan (CEIP) considering that he had already rendered
more than twenty (20) years of continuous service. On July 13, 1989 respondent Esso International, through W.J. Vrints,
Employee Relations Manager, denied petitioner Millares request for optional retirement on the following grounds, to wit:
(1) he was employed on a contractual basis; (2) his contract of enlistment (COE) did not provide for retirement before the
age of sixty (60) years; and (3) he did not comply with the requirement for claiming benefits under the CEIP, i.e., to submit
a written advice to the company of his intention to terminate his employment within thirty (30) days from his last
disembarkation date.

On August 9, 1989, petitioner Millares requested for an extension of his leave of absence from August 9 to 24,
1989. Respondent Esso International advised petitioner Millares that in view of his absence without leave, which is
equivalent to abandonment of his position. Petitioner Millares & Lagda are in the same situation, and because of this
petitioners Millares and Lagda filed a complaint-affidavit for illegal dismissal and non-payment of employee benefits
against private respondents Esso International and Trans-Global, before the POEA.[5]

POEA rendered a decision dismissing the complaint for lack of merit. On appeal to the NLRC, the decision of the
POEA was affirmed. Hence, this petition.
ISSUE:
Whether or not, petitioners seafarers are considered regular employee and entitled for statutory and monetary benefits
provided by PD 442.
(3) Whether or not petitioners be held liable under Art. 38 which falls under prohibited practices enumerated under Art. 34
of PD 442.

HELD:
No. Petitioners cannot be considered regular employees notwithstanding that the work they perform is necessary and
desirable in the business of the respondent company. The exigencies of the work of seafarers necessitates that they be
employed on a contractual basis. Thus, even with the continued re-hiring by respondent company of petitioner to serve as
radio officer onboard the formers different vessels, this should be interpreted not as a basis for regularization but rather a
series of contract renewals.

Court resolves PARTIALLY GRANT, The Decision of the NLRC is hereby REINSTATED with MODIFICATION. The
Private Respondents, Trans-Global Maritime Agency, Inc. and Esso International Shipping Co., Ltd. are hereby jointly and
severally ORDERED to pay petitioners One Hundred Percent (100%) of their total credited contributions as provided under
the Consecutive Enlistment Incentive Plan(CEIP).

126. PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. SAMINA ANGELES y CALMA, accused-appellant.
G.R. No. 132376, April 11, 2002

FACTS:
Samina Angeles y Calma was charged with four (4) counts of estafa and one (1) count of illegal recruitment with
Criminal Case No. 94-140489 (Illegal Recruitment). That sometime during the month of September 1994 in the City of
Manila, Philippines, the said accused, representing herself to have the capacity to contract, enlist and transport Filipino
workers for employment abroad, did then and there willfully and unlawfully for a fee, recruit and promise employment/job
placement abroad to the following persons:

1. Marceliano T. Tolosa
2. Precila P. Olpindo
3. Vilma S. Brina
4. Maria Tolosa de Sardea y Tablada

Without first having secured the required license or authority from the Department of Labor and Employment.

The five (5) cases were consolidated and tried jointly by the Regional Trial Court of Manila, Branch 50. Maria Tolosa
Sardea was working in Saudi Arabia when she received a call from her sister, Priscilla Agoncillo, who was in Paris,
France. Priscilla advised Maria to return to the Philippines and await the arrival of her friend, accused-appellant Samina
Angeles, who will assist in processing her travel and employment documents to Paris, France. Heeding her sisters advice,
Maria immediately returned to the Philippines. Marceliano Tolosa who at that time was in the Philippines likewise received
instructions from his sister Priscilla to meet accused-appellant who will also assist in the processing of his documents for
Paris, France. Maria and Marceliano eventually met accused-appellant in September 1994 at Expert Travel Agency on
Mabini Street, Manila. During their meeting, accused-appellant asked if they had the money required for the processing of
their documents. On September 8, 1994, Maria gave P107,000.00 to accused-appellant at Expert Travel
Agency. Subsequently, she gave another P46,000.00 and US$1,500.00 as additional payments to accused-appellant.
Marceliano, on the other hand, initially gave P100,000.00 to accused-appellant but on September 28, 1994, he gave an
additional P46,000.00 and US$1,500.00 to accused-appellant at the United Coconut Planters Bank in Makati. Analyn
Olpindo met accused-appellant in Belgium. At that time, Analyn was working in Canada but she went to Belgium to visit
her in-laws. After meeting accused-appellant, Analyn Olpindo called up her sister, Precila Olpindo, in the Philippines and
told her to meet accused-appellant upon the latters arrival in the Philippines because accused-appellant can help process her
documents for employment in Canada. Precila Olpindo eventually met accused-appellant at the Expert Travel Agency on
September 7, 1994. Accused-appellant asked for the amount of $4,500.00, but Precila was only able to give $2,500.00.
No evidence was adduced in relation to the complaint of Vilma Brina since she did not testify in court.
Accused-appellant told Precila Olpindo and Vilma Brina that it was easier to complete the processing of their papers
if they start from Jakarta, Indonesia rather than from Manila. Thus, on September 23, 1994, Precila Olpindo, Vilma Brina
and accused-appellant flew to Jakarta, Indonesia. However, accused-appellant returned to the Philippines after two days,
leaving behind Precila and Vilma. They waited for accused-appellant in Jakarta but the latter never returned. Precila and
Vilma eventually came home to the Philippines on November 25, 1994. When she arrived in the Philippines, Precila tried
to get in touch with accused-appellant at the Expert Travel Agency, but she could not reach her. Meanwhile, Maria and
Marceliano Tolosa also began looking for accused-appellant after she disappeared with their money.
Elisa Campanianos of the Philippine Overseas Employment Agency presented a certification to the effect that accused-
appellant was not duly licensed to recruit workers here and abroad.
After trial on the merits, the court decided that accused-appelant Samina Angeles y Calma is guilty beyond reasonable doubt
for the crime charged of 4 counts of Estafa and Illegal Recuitment. Hence, this appeal.
ISSUE:
Whether or not, accused-appelant Samina Angeles is guilty for the crime of illegal recruitment.
HELD:
ACQUITTED. The prosecution failed to prove her guilt beyond reasonable doubt. Accused-appellant points out that not
one of the complainants testified on what kind of jobs were promised to them, how much they would receive as salaries, the
length of their employment and even the names of their employers, which are basic subjects a prospective employee would
first determine. In sum, accused-appellant posits that the prosecution did not present a single evidence to prove that she
promised or offered any of the complainants jobs abroad.
Illegal recruitment is committed when two (2) elements concur: 1) that the offender has no valid license or authority
required by law to enable one to lawfully engage in recruitment and placement of workers; and 2) that the offender
undertakes either any activity within the meaning of recruitment and placement defined under Article 13(b), or any
prohibited practices enumerated under Article 34.[
To prove illegal recruitment, it must be shown that the accused-appellant gave complainants the distinct impression that he
had the power or ability to send complainants abroad for work such that the latter were convinced to part with their money
in order to be employed.[4] To be engaged in the practice of recruitment and placement, it is plain that there must at least be
a promise or offer of an employment from the person posing as a recruiter whether locally or abroad.
In the case at bar, accused-appellant alleges that she never promised nor offered any job to the complainants.
A perusal of the records reveals that not one of the complainants testified that accused-appellant lured them to part
with their hard-earned money with promises of jobs abroad. On the contrary, they were all consistent in saying that their
relatives abroad were the ones who contacted them and urged them to meet accused-appellant who would assist them in
processing their travel documents. Accused-appellant did not have to make promises of employment abroad as these were
already done by complainants relatives.

Art. 38. Illegal Recruitment. (a) Any recruitment activities, including the prohibited enumerated under Article 34
of this code (PD 442), to be undertaken by non-licensees or non-holders of authority, shall be deemed illegal and punishable
under Article 39 of this code. The Department of labor and Employment or any law enforcement officer may initiate
complaints under this Article.
G.R. Nos. 135030-33. July 20, 2001.

127. PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. MERCY LOGAN y CALDERON, accused-appellant.

Facts: At separate instances, Rodrigo Acorda, Florante Casia, and Orlando Velasco went to Mercy Logans office after
learning that she can secure them jobs in Japan. Logan accommodated each of them and asked for the payment of placement
fees to facilitate the process of their employment applications. However, Logan failed to process their applications. She
issued checks in the name of the complainants to return the payments they made but it was not honored by the bank as the
Logans account was already closed. They also learned that Logans recruitment agency was not licensed by the POEA to
recruit applicants for overseas employment. Logan was then charged in one information with three counts of the crime of
estafa, and in another information with the crime of illegal recruitment in large scale.

In her defense, Logan claims that she did not represent herself as a job recruiter to the private complainants. According to
her, the private complainants were the ones who went to her office in and pleaded with her to help them find jobs abroad.
While she admitted having received money from the private complainants, the appellant turned the same over to a certain
Gloria de Leon who actually recruited them for overseas employment; and that Gloria de Leon reneged on her promise to
the private complainants. Hence, they implicated her in these cases inasmuch as their transactions with Gloria de Leon took
place in her office.

Issue: Whether or not Logan committed the crime of illegal recruitment.

Ruling: Yes.

Ratio Decidendi: It has been established that the three (3) private complainants met with the appellant on separate occasions
in her office to apply for overseas employment. On the said occasions, she promised them employment either as construction
workers or piggery helpers in Japan for a fee. Despite subsequent payment of her required fees, she failed to secure for the
three (3) private complainants any overseas employment. Clearly, the appellant was engaged in large-scale recruitment and
placement activities which were illegal for the reason that she had no license nor authority from the Secretary of Labor and
Employment. The signatures of the appellant appearing on the written receipts presented by the prosecution during the trial
acknowledging receipt of the corresponding amounts stated thereon undeniably supported the testimonies of the private
complainants that they transacted directly with her. Significantly, the signature of Gloria de Leon to whom appellant alleged
to have turned over the money of the complainants and who actually recruited complainants for overseas employment did
not appear on any of those written receipts. These acts of the appellant certainly militate against her claim that she did not
actually receive and benefit from the amounts that she collected from the said private complainants. In the light of these
established facts, the appellant was found guilty beyond reasonable doubt of the crimes of three (3) counts of estafa and one
count of illegal recruitment in large scale. However, the Court modified the indeterminate penalty imposed by the trial court
on the appellant in accordance with a previous ruling. Hence, the assailed decision of the trial court was affirmed and was
modified accordingly.
128. G.R. No. 128280. April 4, 2001.

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. ALICIA A. CHUA, accused-appellant.

(No labor-related topic found on the case syllabus)

Facts: Sometime around November 1992, Chua received a facsimile message from Harmony Electronics Company in
Taiwan, asking her to call up To-ong and Tercenio and tell them that they were needed in Taiwan. To-ong and Tercenio
went to the office of Chua, and the latter told them that she could send them to Taiwan upon their payment of a placement
fee. She also asked them to secure NBI clearances and medical certificates, assuring that they would be able to leave for
Taiwan soon. Three months passed, but they were not deployed. Tercenio became apprehensive and told Chua that he would
withdraw his application and ask for refund of the placement fee. Chua repeatedly promised that she would give back the
money to him, but she never did. After a few more months, Tercenio could not anymore locate Chua. She used the
same modus operandi on the other private complainants. She was then charged with an information of the crime of large-
scale illegal recruitment and 9 counts of estafa.

In her brief, Chua anchors her defense on the approval of her application for a license to recruit on April 13, 1993, which,
according to her, rendered her a genuine holder of authority.

Issue: Whether or not Chua is authorized to recruit the complainants.

Ruling: No.

Ratio Decidendi: Appellant interposes the defense that the approval of her application for a service contractor's authority
on April 13, 1993 should be given a retroactive effect as to make all her previous recruitment activities valid. The records
show that the license was not issued due to her failure to comply with post-licensing requirements. It is the issuance of the
license that makes the holder thereof authorized to perform recruitment activities. The law specifically provides that
every license shall be valid for at least two (2) years from the date of issuance unless sooner cancelled or revoked by the
Secretary. Appellant cannot now claim that she was a genuine holder of authority from the Secretary of Labor and
Employment to recruit factory workers for Harmony Electronics Company based in Taiwan.

129. G.R Nos. 117145-50 & 117447. March 28, 2000

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. LEONIDA MERIS y PADILLA, accused-appellant.

Facts: Leonida Meris was convicted of six (6) counts of estafa and one count of illegal recruitment for defrauding the six
(6) complainants, Meris townmates in Pampanga and relatives in large scale in the amount of P30,000.00 each for five
complainants and one complainant for P20,000.00 for alleged overseas employment which did not materialize.

Meris, who voluntarily appeared in court, pleaded not guilty to the charges and actively participated in her defense. She
interposed the defense of denial claiming that she merely introduced complainants to Julie Micua, her recruiter in Manila,
with whom complainants transacted with for their employment abroad upon payment of placement fees denied having
represented herself as having the capacity to deploy workers abroad.

Evidence for the prosecution, however, disclosed, that complainants would not have known Julie Micua were if not for
appellant who even accompanied them to Manila to see Julie Micua. It was appellant and her husband who received almost
all the payments of complainants and who issued receipts signed by Julie Micua. Certification from the POEA showed that
Meris and Julie Micua were not licensed to recruit workers for overseas employment.

In this appeal, appellant assailed the lack of jurisdiction of the trial court over his person because of the warrantless arrest
and its findings of fact.

Issue: Whether or not Meris committed the crimes large-scale illegal recruitment and estafa.

Ruling: Yes.

Ratio Decidendi: The prosecution undoubtedly proved that Meris, without license or authority, engaged in recruitment and
placement activities. This was done in collaboration with Julie Micua, when they promised complainants employment in
Hong Kong. Art. 13, par. (b) of the Labor Code defines recruitment and placement as any act of canvassing enlisting,
contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad, whether for profit or not; Provided that any person or entity which, in any
manner, offers or promises for a fee employment to two or more persons shall be deemed engaged in recruitment and
placement.

Although Meris was not an employee of the alleged illegal recruiter Julie Micua, the evidence show that she was the one
who approached complainants and prodded them to seek employment abroad. It was through her that they met Julia Micua.
This is clearly an act of referral. Worse, accused-appellant declared that she was capable of placing them in jobs overseas.
Suffice it to say that complainants recruitment would not have been consummated were it not for the direct participation
of accused-appellant in the recruitment process.
130. G.R. No. 125044. July 13, 1998

IMELDA DARVIN, petitioner, vs. HON. COURT OF APPEALS and PEOPLE OF THE
PHILIPPINES, respondents.

Facts: Accused-appellant used to be connected with Dale Travel Agency. In 1992, she was introduced to Macaria Toledo
by a friend. Toledo sought her help to secure a passport, U.S. Visa and airline tickets to the States. She did not promise any
employment in the U.S. to Toledo. She, however, admitted having received the amount of P150,000.00 from Toledo and
contends that it was used for necessary expenses of an intended trip to the U.S. of Toledo and her friend, Florencio Rivera.
After receiving the money, she told Toledo that the papers will be released within 45 days. Appellant alleged that she was
not engaged in illegal recruitment but merely acted as a travel agent in assisting individuals to secure passports and visa.
Charged with Estafa and Illegal Recruitment before the trial court, the latter found her guilty of the crime of simple illegal
recruitment but acquitted her of estafa. The Court of Appeals affirmed in toto the trial court's decision.

Issue: Whether or not Darvin committed the crime of illegal recruitment.

Ruling: No. Accused-appellant was acquitted on ground of reasonable doubt of the crime charged.

Ratio Decidendi: The Supreme Court held that to uphold the conviction for the crime of illegal recruitment, two elements
must concur, i.e., the person charged must have undertaken recruitment activities; and that he does not have a license or
authority to do so.

In the case at bar, the Court finds, no sufficient evidence to prove that appellant offered a job to private respondent. It is not
clear that she gave the impression that she was capable of providing the private respondent work abroad. By themselves,
procuring a passport, airline tickets and foreign visa for another individual, without more, can hardly qualify as recruitment
activities. Aside from the testimony of private respondent, there is nothing to show that accused-appellant engaged in
recruitment activities. We also note that the prosecution did not present the testimonies of witnesses who could have
corroborated the charge of illegal recruitment, such as Florencio Rivera, and Leonila Rivera, when it had the opportunity to
do so. As it stands, the claim of private respondent that accused-appellant promised her employment abroad is
uncorroborated. All these, taken collectively, cast reasonable doubt on the guilt of the accused.

131. G.R. No. 109583. September 5, 1997

TRANS ACTION OVERSEAS CORPORATION, petitioner, vs. THE HONORABLE SECRETARY OF LABOR,
ROSELLE CASTIG

ADOR,

Facts: Private respondents sought employment as domestic helpers through petitioner's employees. The applicants paid
placement fees ranging from P1,000.00 to P14,000.00, but petitioner failed to deploy them. Their demand for refund
proved unavailing; thus, they were constrained to institute complaints against petitioner for violation of Articles 32 and
34(a) of the Labor Code, as amended. The Undersecretary of Labor found that the petitioner is liable for 28 counts of
violation of Article 32 and 5 counts of Art. 34(a) and ordered the cancellation of its license to participate in the overseas
placement and recruitment of workers. The cancellation of petitioner's license was temporarily lifted but the order
revoking its license was reinstated when the petitioner's motion for reconsideration was eventually denied for lack of
merit.

Issue: Whether or not the Secretary of Labor and Employment has jurisdiction to cancel or revoke the license of a private
fee charging employment agency.

Ruling: Yes.

Ratio Decidendi: The Supreme Court ruled that the power to suspend or cancel any license or authority to recruit
employees for overseas employment is concurrently vested with the Philippine Overseas Employment Authority (POEA)
and the Secretary of Labor.

132. G.R. No. 78085. October 16, 1989

ROYAL CROWN INTERNATIONALE, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and
VIRGILIO P. NACIONALES, respondents.

Facts: Royal Crown Internationale recruited and deployed Virgilio Nacionales for employment with ZAMEL as an
architectural draftsman in Saudi Arabia, thus a a service agreement was executed by Nacionales and ZAMEL.

Issue: Whether or not petitioner as a private employment agency may be held jointly and severally liable with the foreign-
based employer for any claim which may arise in connection with the implementation of the employment contracts of the
employees recruited and deployed abroad.
Ratio Decidendi: The Supreme Court ruled that petitioner conveniently overlooks the fact that it had voluntarily assumed
solidary liability under the various contractual undertakings it submitted to the Bureau of Employment Services. In applying
for its license to operate a private employment agency for overseas recruitment and placement, petitioner was required to
submit, among others, a document or verified undertaking whereby it assumed all responsibilities for the proper use of its
license and the implementation of the contracts of employment with the workers it recruited and deployed for overseas
employment [Section 2(e), Rule V, Book I, Rules to Implement the Labor Code (1976)]. It was also required to file with
the Bureau a formal appointment or agency contract executed by the foreign-based employer in its favor to recruit and hire
personnel for the former, which contained a provision empowering it to sue and be sued jointly and solidarily with the
foreign principal for any of the violations of the recruitment agreement and the contracts of employment [Section 10 (a) (2),
Rule V, Book I of the Rules to Implement the Labor Code (1976)]. Petitioner was required as well to post such cash and
surety bonds as determined by the Secretary of Labor to guarantee compliance with prescribed recruitment procedures, rules
and regulations, and terms and conditions of employment as appropriate [Section 1 of Pres. Dec. 1412 (1978) amending
Article 31 of the Labor Code].

These contractual undertakings constitute the legal basis for holding petitioner, and other private employment or recruitment
agencies, liable jointly and severally with its principal, the foreign-based employer, for all claims filed by recruited workers
which may arise in connection with the implementation of the service agreements or employment contracts.

133. G.R. No. 77279. April 15, 1988

MANUELA S. CATAN/M.S. CATAN PLACEMENT AGENCY, petitioners, vs. THE NATIONAL LABOR
RELATIONS COMMISSION, PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION and
FRANCISCO D. REYES, respondents.

Facts: M.S. Catan Placement Agency (Catan), a duly licensed recruitment agency, as agent of Ali and Fahd Shabokshi
Group, a Saudi Arabian firm, recruited Francisco Reyes to work in Saudi Arabia as a steelman. The term of the contract
was for one year, from May 1981 to May 1982. However, the contract provided for its automatic renewal if neither of the
parties notifies the other party of his wishes to terminate the Contract by at least one month prior to the expiration of the
contractual period.

The contract was automatically renewed when Reyes was not repatriated by his Saudi employer but instead was assigned
to work as a crusher plant operator. While he was working as a crusher plant operator, Reyess right ankle was crushed
under the machine he was operating. After the expiration of the renewed term, Reyes returned to the Philippines and had
his ankle operated, for which he incurred expenses. He then returned to Saudi Arabia to resume his work and after several
months, he was repatriated. Upon his return, he had his ankle treated for which he incurred further expenses.

On the basis of the provision in the employment contract that the employer shall compensate the employee if he is injured
or permanently disabled in the course of employment, Reyes filed a claim against Catan with the POEA. The decision
rendered by POEA was in favor of Reyes, which was later on affirmed by the NLRC.
Catan claims that the NLRC gravely abused its discretion when it ruled that Catan was liable to Reyes for disability benefits
since at the time he was injured his original employment contract, which Catan facilitated, had already expired. Further,
Catan disclaims liability on the ground that its agency agreement with the Saudi principal had already expired when the
injury was sustained.

Issue: Whether or not Catan is liable for the disability benefits of Reyes.

Ruling: Yes.

Ratio Decidendi: Reyess contract of employment cannot be said to have expired on May 1982 as it was automatically
renewed since either or both of the parties gave no notice of its termination. Therefore, private respondent's injury was
sustained during the lifetime of the contract.

The Supreme Court ruled that a private employment agency may be sued jointly and solidarily with its foreign principal for
violations of the recruitment agreement and the contracts of employment. A recruitment agency is also solidarily liable for
the unpaid salaries of a worker it recruited for employment in Saudi Arabia. Even if indeed petitioner and the Saudi principal
had already severed their agency agreement at the time Reyes was injured, Cata may still be sued for a violation of the
employment contract because no notice of the agency agreement's termination was given to Reyes. Its responsibility over
the proper implementation of Reyess employment/service contract and the welfare of Reyes himself in the foreign job site
still existed since the contract of employment in question has not expired yet.

134. PEOPLE VS. CALONZO, G.R. Nos. 115150 55, September 27, 1996

Facts: Ambrosio was charged with Illegal Recruitment in Large Scale and five (5) counts of Estafa by Bernardo Miranda,
Danilo de los Reyes, Elmer Clamor, Belarmino Torregrosa and Hazel de Paula. On 5 April 1994 the Regional Trial Court
of Pasig found the accused guilty.

Sometime in February 1992 Danilo de los Reyes and his brother-in-law Belarmino Torregrosa met Reydante Calonzo in the
house of Loreta Castaeda. In that meeting Calonzo lost no time in informing them that he could provide them employment
abroad, particularly Italy, for a fee. Upon returning home they took stock of their assets and resources and came up with the
figures sufficient for the processing of their applications for employment abroad. Two months after their initial meeting, De
los Reyes gave Calonzo P50,000.00. He also pledged the Ford Fiera of his brother-in-law to Calonzo for P70,000.00 in
order to come up with the P120,000.00 processing fee imposed by Calonzo. The latter then informed De los Reyes of his
"scheduled" departure for Italy. However, despite the lapse of the period, De los Reyes and Torregrosa remained in the
Philippines although their recruiter reiterated his promise to send them to Italy.

On 1 May 1992, instead of sending them to Italy, they were billeted at Aloha Hotel along Roxas Boulevard. The following
day, or on 2 May 1992, they boarded a plane that was supposed to take them to Italy. But Calonzo had another destination
in mind. They landed in Bangkok instead where their visas for Italy, according to Calonzo, would be processed. They stayed
at P.S. Guest Hotel for one and a half months. While in Bangkok the accused again collected money from them purportedly
to defray the expenses for their visas. They also incurred expenses for food and accommodation, and for overstaying, De
los Reyes had to pay 2800 bahts to the immigration authorities only to discover to their utter dismay that Calonzo had
already returned to the Philippines.
They verified from the POEA whether Calonzo or his R. A. C. Business Agency was duly authorized and licensed to recruit
people for employment abroad. The POEA certified that R. A. C. Business Agency was not licensed to recruit workers for
overseas employment.
Torregrosa substantiated the above account. He testified that he gave Calonzo a total of P100,000.00. On cross-examination
however he stated that he gave such amount on 27 April 1992 and not on 13 April 1992 as testified to by De los Reyes. But
the date appearing on the receipt marked Exhibit A is 13 April 1992. Torregrosa also claimed that while in Bangkok he gave
Calonzo an additional amount of US$100.00.

On her part, Hazel de Paula testified that she first met appellant and the other complainants at the house of Loreta Castaeda
at No. 10 P. Burgos Street, Pasig, Metro Manila. Convinced that she would eventually be employed in Italy as a domestic
helper she gave Calonzo P120,000.00. Unlike the other complaining witnesses, she was not able to fly to Bangkok on 2
May 1992 as her passport was not yet available. She left only on 6 May 1992 where she was met by Calonzo at the airport
and brought to the P.S. Guest Hotel where her companions who had arrived earlier were already billeted. She said that while
in Bangkok Calonzo asked money again from her.
Elmer Clamor, a 28-year old resident of Gen. Trias, Cavite, was similarly situated with Hazel de Paula. Clamor narrated
that he gave Calonzo P120,000.00 for the latter's commitment to send him to Italy, and in fact while in Bangkok he gave
Calonzo US$250.00 more.
Bernardo Miranda, a construction worker from Talisay, Batangas, was another victim of Calonzo. Lured by the latter's
assurances that he would be sent to Italy, he gave Calonzo a total of P120,000.00 for the processing of his application for
work in Italy. But, like all the rest of them, Miranda only reached Bangkok. The promised job, his hard-earned money and
Calonzo himself eventually disappeared.

Senior Labor Employment Officer Nenita Mercado of the POEA confirmed that neither Reydante Calonzo nor his R. A. C.
Business Agency was authorized to recruit workers for employment abroad.

ISSUE: WON Illegal Recruitment was committed?

RULING: YES, Illegal recruitment is specifically defined in Art. 38 of the Code thus

(a) Any recruitment activities, including the prohibited practices enumerated under Article 34 of this Code, to be undertaken
by non-licensees or non-holders of authority shall be deemed illegal and punishable under Article 39 of this Code x x x x

(b) Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic
sabotage and shall be penalized in accordance with Article 39 hereof.
Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring
and/or confederating with one another in carrying out any unlawful or illegal transaction, enterprise or scheme defined under
the first paragraph hereof. Illegal recruitment is deemed committed in large scale if committed against three (3) or more
persons individually or as a group.

All the five (5) complaining witnesses met each other for the first time at the house of Loreta Castaeda. They were not in
any way acquainted with one another prior to that meeting save for Danilo de los Reyes and his brother-in-law Belarmino
Torregrosa. They all came from different places, yet, they were all united in pointing to the Calonzo as the person who
enticed them to apply for employment abroad.

135. SALAZAR VS ACHACOSO AND MARQUEZ, G.R. No. 81510, March 14, 1990

FACTS: On October 21, 1987, Rosalie Tesoro filed with the POEA a complaint against petitioner. Having ascertained that
the petitioner had no license to operate a recruitment agency, public respondent Administrator Tomas D. Achacoso issued
his challenged CLOSURE AND SEIZURE ORDER.

The POEA brought a team to the premises of Salazar to implement the order. There it was found that petitioner was operating
Hannalie Dance Studio. Before entering the place, the team served said Closure and Seizure order on a certain Mrs. Flora
Salazar who voluntarily allowed them entry into the premises. Mrs. Flora Salazar informed the team that Hannalie Dance
Studio was accredited with Moreman Development (Phil.). However, when required to show credentials, she was unable to
produce any. Inside the studio, the team chanced upon twelve talent performers practicing a dance number and saw about
 twenty more waiting outside, The team confiscated assorted costumes which were duly receipted for by Mrs. Asuncion
Maguelan and witnessed by Mrs. Flora Salazar.

A few days after, petitioner filed a letter with the POEA demanding the return of the confiscated properties. They alleged
lack of hearing and due process, and that since the house the POEA raided was a private residence, it was robbery.

On February 2, 1988, the petitioner filed this suit for prohibition. Although the acts sought to be barred are already fait
accompli, thereby making prohibition too late, we consider the petition as one for certiorari in view of the grave public
interest involved.

ISSUE: May the Philippine Overseas Employment Administration (or the Secretary of Labor) validly issue warrants of
search and seizure (or arrest) under Article 38 of the Labor Code?

HELD: No, it is only a judge who may issue warrants of search and arrest. Neither may it be done by a mere prosecuting
body.

The Secretary of Labor, not being a judge, may no longer issue search or arrest warrants. Hence, the authorities must go
through the judicial process. To that extent, we declare Article 38, paragraph (c), of the Labor Code, unconstitutional and
of no force and effect.

Moreover, the search and seizure order in question, assuming, ex gratia argumenti, that it was validly issued, is clearly in
the nature of a general warrant. We have held that a warrant must identify clearly the things to be seized, otherwise, it is
null and void
For the guidance of the bench and the bar, we reaffirm the following principles:

1. Under Article III, Section 2, of the l987 Constitution, it is only judges, and no other, who may issue warrants of arrest and
search:
2. The exception is in cases of deportation of illegal and undesirable aliens, whom the President or the Commissioner of
Immigration may order arrested, following a final order of deportation, for the purpose of deportation.

136. PEOPLE VS GOCE, 247 SCRA 780, August 29, 1995

FACTS: On January 1988, an information for illegal recruitment committed by a syndicate and in large scale, punishable
under Articles 38 and 39 of the labor code as amended by PD 2018, filed against Dan and Loma Goce and Nelly Agustin in
the RTC of Manila, alleging that in or about during the period comprised between May 1986 and June 25, 1987, both dates
inclusive in the City of Manila, the accused conspired and represent themsleves to have the capacity to recruit Filipino
workers for employment abroad.

January 1987, a warrant of arrest was issued against the 3 accused bot none of them was arrested. Hence, on February 1989,
the RTC prdered the case archived but issued a standing warrant os arrest against the accused.

Thereafter, knowing the whereabouts of the accused, Rogelio Salado requested for a copy of the warrant of arrest and
eventually Nelly Agustin was apprehended by the Paranaque Police. Agustin's counsel filed a motion to revive the case and
requested to set a hearing for purpose of due process and for accused to immediately have her day in court. On the
arraignment, Agustin pleaded not guilty and the trial went on with four complainants testified for the prosecution and
reciepts of the processing fees they paid.

Agustin for the defense asserted that Goce couple were licensed recruiters but denied her participation in the recruitment
and denied knowledge of the receipts as well.

On November 1993, trial court rendered judgment finding that Agustin as a principal in the crime of illegal recruitment in
large scale with sentence of life imprisonment and pay P100,000.00.

ISSUES: ON Illegal recruitment was committed?

RULING:
The testimonial evidence shows that Agustin indeed further committted acts constitutive of illegal recruitment because, the
complainants had a previous interview with Agustin (as employee of the Goce couple) about fees and papers to submit that
may constitute as referral. Agustin collected the payments of the complainants as well as their passports, trainning fees,
medical tests and other expenses.On the issue of proof, the court held that the receipts exhibited by the claimants are clear
enough to prove the payments and transaction made

137. PEOPLE VS AVENDANO, 216 SCRA 187 (1992)

FACTS: The accused (Abelardo C. Avendao) is the Treasurer of MCBRAJ Agro-Industrial Development Company
(MAINDECO), with offices at 26 Sta. Cecilia St., Sto. Rosario Village, Malabon, Metro Manila, which is also his residence.
The company is not licensed nor authorized to recruit workers for overseas employment. Carmelito Soriano, Jr. is the
President of said Company. Manuel Calanog is the personnel manager (pp. 17-18, tsn, June 21, 1988; pp. 22-23, Rec.)

In Criminal Case No. 6113, the evidence shows that Rolando Crucena and Zosimo del Rosario went to the house of the
accused sometime in June, 1986 to apply as plumber and steel bender, respectively, in Papua, New Guinea. Guillermo
Romasanta likewise applied for a job as plumber when he went to the house of accused in July, 1986. They were all required
to submit papers, such as bio-data, birth certificate, marriage contract, certification of previous employment and clearances.
Each one of them was asked by the accused to give P5,500.00. After giving said amount to the accused, the latter told them
that they could leave within ninety days. Said period expired but they were not able to leave and were asked to wait, with a
promise that they would be able to leave later, and they waited for almost one year, until they got tired of waiting and filed
a complaint against the accused.

In Criminal Case No. 6114, Feliciano Bago, Federico Mojica and Alberto Espinelli went to the house of the accused to
apply for jobs in Papua, New Guinea as steel fixer and plumbers sometime in June, 1986, submitted their papers and paid
P5,500.00 to the accused, who told them they could leave within ninety days but which did not materialize.

In Criminal Case No. 6125, Reynaldo Panganiban and Apolonio Mejica applied as steelman and warehouseman,
respectively, with MAINDECO in June, 1986, submitted documents and paid P5,500.00 to the accused, who assured them
that they could leave for Papua, New Guinea, which did not materialize despite a long period of time. Ruben Ambat applied
with MAINDECO as electrician in November, 1986 and submitted documents and paid P5,500.00 to the accused, who told
him he could leave for Papua, New Guinea before Christmas or three months thereafter, but was not able to do so. However,
Pamfilo Llamado and Tomas Liveta, who likewise applied with MAINDECO for jobs in Papua, New Guinea in June, 1986
and October, 1985, respectively, admitted that the accused only received the placement fee of P4,500.00 from them and
issued receipts therefor, but did not promise them jobs in Papua New Guinea, which promise was made to them by the
President and Personnel Manager of MAINDECO.

In Criminal Case No. 6131, Bayani Afable and Leodegario Robles went to MAINDECO in March, 1987 and applied as
electricians in Papua, New Guinea and talked with the accused, who asked them to give P5,000.00 each. They gave the
money and the documents required by the office in connection with their job applications to the accused, who assured them
that they could leave for abroad.

In Criminal Case No. 6143, Rodolfo Lauzon applied on March 5, 1986 with MAINDECO for a job as janitor in Papua,
New Guinea and was asked to pay a placement fee of P5,500.00. He paid said amount to the accused, who then told him
that he could leave after three months.

In Criminal Case No. 6148, Henry Camba applied in April, 1985 with MAINDECO for a job as electrician in Papua,
New Guinea, submitted the papers required by said company and paid the amount of P4,000.00 to the accused and he was
told that he could leave within three to six months. However, two years lapsed and Henry Camba was still not able to leave
and he demanded for the reimbursement of the money he paid, to no avail.

It appears that the receipts issued by the accused to the complainants show that the payments made by them were in the
form of trust deposit for one unit of share in the company. The receipts were subsequently surrendered to the company in
exchange of certificates of common share in MCARM Agro-Industrial Development Corporation, making the complainants
stockholders of the corporation. However, Henry Camba refused to surrender his receipt in exchange for a certificate of
common share as he was insisting that the money he paid be returned to him. Moreover, while some of the complainants
paid P5,500.00, the receipts issued to them reflected only the amount of P4,500.00 as the balance of P1,000.00 was allegedly
for the processing of their passport and physical examination. Some of the complainants underwent physical examination
and made to attend orientation seminars to Papua New Guinea. The complainants finally got tired of
waiting for the promised employment abroad and filed their complaints against the accused.

ISSUE: WON Illegal Recruitment in Large Scale was committed?

RULING: Yes, The trial court correctly found Avendao to have conspired with his co-accused Carmelito Soriano, Jr.,
Manuel Calanog and Renato M. Soriano, to illegally recruit some 38 persons for overseas employment, charging and
collecting a fee of P5,500.00 from each job applicant although they (the accused) did not have the required license and
authority from the Department of Labor to engage in recruiting workers for overseas employment. They defrauded the job
applicants of the "fees" (P5,500.00) which the latter paid for the false hope of obtaining employment in Papua, New Guinea,
which was never realized. Appellant's pretext that the fee of P5,500.00 paid by each job applicant was not a placement fee
but payment for a share of stock in MAINDECO, supposedly a prerequisite for the deployment of the "stockholder" in
Papua, New Guinea, must be rejected for the simple reason that those who purchased the "shares" did not intend to invest,
but to obtain a job placement, in Papua, New Guinea. They were not investors but job seekers. Further proof that they were
being swindled is that those who paid P5,500.00 each received a receipt for only P4,500.00 from the appellant who informed
them that the unreceipted amount of P1,000.00 was to pay for their medical examination and the processing of their
passports, although no passports were ever issued to them.

Appellant and his co-accused committed Illegal Recruitment on a Large Scale as defined and penalized in Articles
38(b) and 39(a) of the Labor Code, because they had victimized more than three (3) job applicants thirty eight (38)
in fact.

"ART. 38. Illegal Recruitment. - (a) Any recruitment activities, including the prohibited practices enumerated under Article
34 of this Code, to be undertaken by non-licensees or non-
holders of authority shall be deemedillegal and punishable under Article 39 of this Code. The Ministry of Labor and
Employment or any law enforcement officers may initiate complainants under this Article.
"(b) Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic
sabotage and shall be penalized in accordance with Article 39 hereof.
"Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring
and/or confederating with one another in carrying out any unlawful or illegal transaction, enterprise or scheme defined under
the first paragraph
hereof. Illegal recruitment is deemed committed inlarge scale if committed against three (3) or more persons individually
or as a group."
"ART. 39. Penalties. - (a) The penalty of life imprisonment and a fine of One Hundred Thousand Pesos (P100,000) shall be
imposed if illegal recruitment constitutes economic sabotage as defined herein:
"xxx xxx xxx
"(c) Any person who is neither a licensee nor a holder of authority under this Title found violating any provision thereof or
its implementing rules and regulations shall, upon conviction thereof, suffer the penalty of imprisonment of not less than
four years nor more than eight years or a fine of not less than P20,000 nor more than P100,000 or both such imprisonment
and fine, at the discretion of the court;
"(d) If the offender is a corporation, partnership, association or entity, the penalty shall be imposed upon the officer or
officers of the corporation, partnership, association or entity responsible for violation; and if such officer is an alien, he
shall, in addition to the penalties herein prescribed, be deported without further proceedings;" (Underscoring supplied)

In Crim. Cases Nos. 6113-MN and 6114-MN where Avendao acted in conspiracy with his co-accused to fleece three (3)
job applicants in each case of their placement fees for non-existent overseas jobs, and in Crim. Case No. 6125-MN where
they victimized five (5) persons, the crimes committed were illegal recruitment by a syndicate (Art. 38, Labor Code).
When illegal recruitment is committed by a syndicate or in large scale, it becomes an offense involving economic
sabotage (Art. 38, Labor Code) and shall be penalized with life imprisonment and a fine of P100,000 (Art. 39, par. [a],
Labor Code).
In Crim. Case No. 6131-MN where only two persons were defrauded, and in Crim. Cases Nos. 6143-MN and 6148-MN
where there was only one victim in each case, the crimes committed were simple illegal recruitment penalized in par. (c),
Art. 39.

As the trial court did not commit any reversible error in finding Avendao guilty of large scale illegal recruitment in
Criminal Cases Nos. 6113, 6114 and 6125, and of simple illegal recruitment in Criminal Cases Nos. 6131, 6143 and 6148,
and as the penalties imposed are in accordance with the law, the appealed decision is hereby AFFIRMED in toto.

138. PEOPLE VS. BODOZO, 215 SCRA 33 (1992)

FACTS: When the accused Nimfa Bodozo was in Luna, La Union, she told the private complainants, who are simple
farmers, and at the time unemployed, that she was recruiting workers for employment in Saudi Arabia and Singapore. The
accused Nimfa Bodozo required the five (5) private complainants to submit to her, in addition to their respective
applications, NBI clearances and medical certificates in connection with their applications. The private complainants
Prudencio Renon and Fernando Gagtan were told by the accused Nimfa Bodozo that their salary in Saudi Arabia was
US$200.00 a month, while the accused Nimfa Bodozo assured private complainants, Angelino Obiacoro, Ludovico Gagtan
and Domingo Obiacoro that they were going to be paid, by their respective employers, in Singapore, the amount of
Singapore 16.00 dollars a day. The private complainants Prudencio Renon and Fernando Gagtan submitted their application
forms, duly filled up, passports, their NBI clearances and medical certificates to the accused Nimfa Bodozo in their residence
at Quirino Avenue, Manila. Domingo Obiacoro, Angelino Obiacoro and Ludovico Gagtan likewise submitted to the accused
their NBI clearances and medical certificates as required by the accused. Moreover, the accused demanded from the private
complainant Prudencio Renon the amount of P19,000.00 in connection with his application for employment abroad of the
said amount, P15,000.00 was to be used by the accused as processing fee for the application and papers of the private
complainant for his employment abroad. Prudencio Renon paid to the accused Nimfa Bodozo, on October 3, 1988, the
amount of P15,000.00 for which the said accused signed a Receipt. The mother of Prudencio Renon paid the balance of
P4,000.00 to the same accused but the latter did not issue any receipt for said amount.
The accused Nimfa Bodozo demanded from the private complainant Fernando Gagtan the amount of P20,000.00 in
connection with his application for employment abroad. Fernando Gagtan paid to the accused Nimfa Bodozo, also on
October 3, 1988, the amount of P12,000.00 for which the said accused signed and issued Receipts and the amount of
P8,000.00 through Maxima Gagtan the mother of Fernando Gagtan, for which the accused Nimfa Bodozo issued a Receipt
dated April 6, 1989.
The accused Nimfa Bodozo demanded from Domingo Obiacoro the amount of P20,000.00 in connection with his
application for employment abroad. Of the amount, P10,000.00 will be used for the purchase of a plane ticket for the private
complainant for Singapore and the balance of P10,000.00 was to be used as placement fee for the application of the private
complainant for employment abroad. Domingo Obiacoro paid P10,000.00 to the accused Nimfa Bodozo in the house of the
friend of the accused in Luna, La Union but the accused did not issue any Receipt for the amount at the time. Domingo
Obiacoro paid the balance of P10,000.00 to the accused Nimfa Bodozo, in the presence of the accused Joey Bodozo in the
house of the accused at President Quirino Avenue, Manila. The accused Joey Bodozo later signed and issued a Receipt for
the said amount of P20,000.00.
The accused Joey Bodozo demanded from Angelino Obiacoro the payment of P20,000.00 in connection with the latters
application for employment abroad. Angelino Obiacoro gave to the accused Joey Bodozo the amount of P10,000.00 in two
(2) installments on different occasion for which the accused Joey Bodozo later signed and issued a Receipt.
The accused Joey Bodozo likewise demanded from Ludovico Gagtan the payment of the amount of P20,000.00 in
connection with his application for employment abroad. Ludovico Gagtan, through his mother, Maxima Gagtan, gave to the
accused Nimfa Bodozo the amount of P10,000.00 but the latter failed to issue any receipt at that time. However, considering
that the private complainant did not have the amount of P10,000.00 to pay the balance of the P20,000.00 demanded by the
accused, but the latter offered to advance the amount for the account of private complainant for which the latter and his
mother, Maxima Gagtan, signed a Promissory Note in favor of the accused Joey Bodozo. However, the accused added
the amount of P4,000.00 to the P10,000.00 purportedly advanced by the accused for the private complainant by way of
interests on said loan. The accused Nimfa Bodozo later signed and issued a Receipt for the amount of P10,000.00 remitted
to her by the mother of Ludovico Gagtan.

ISSUE: WON Illegal Recruitment was committed

RULING: YES, In this case at bar, it is undisputed that accused-appellants Joey Bodozo and Nimfa Bodozo are neither
licensed nor authorized to recruit workers for overseas employment as shown by the certification issued by the Philippine
Overseas Employment Administration (POEA).
Accused-appellants not only asked private complainants to fill up application forms but also to submit to them their NBI
clearances, passports and medical certificates. In addition thereto, accused-appellants collected payment for processing fee
and other sundry expenses from private complainants, all of which constitutes acts of recruitment within the meaning of the
law.

139. PEOPLE VS. TAN TIONG MENG, G.R. No. 120835

FACTS: Gavino Asiman testified that a certain Jose Percival Borja who was a friend of his relative informed him that
a job recruiter would be at Borjas house at Capt. Villareal St., Cavite City, in case anyone was interested in an overseas job
in Taiwan. Asiman further recalled that on 18 August 1993, he and his friend, Librado Pozas went to Borjas house where
they met the accused-appellant who told them he could get them jobs as factory workers in Taiwan with a monthly salary
of P20,000.00. Accused-appellant required them to submit their passport, biodata and their high school diploma as well as
to pay P15,000.00 each for placement and processing fees. The former issued two (2) receipts which he signed in the
presence of Asiman and Pozas.5 Accused-appellant assured them that they could leave for Taiwan twelve (12) days later.
Asiman stated that they filed the complaints for illegal recruitment when they learned that accused-appellant was arrested
for illegal recruitment activities.

Neil Mascardo testified that he met accused-appellant through a friend and also through Jose Borja. Mascardo narrated
that on 7 July 1993, he went to Borjas house to meet accused-appellant who assured him of getting him an employment in
Taiwan at the Rainbow Ship Co., a marble and handicraft factory with a monthly salary of P20,000.00. He further testified
that he paid P15,000.00 to accused-appellant for placement and processing fees as shown by a receipt signed by accused-
appellant. Accused-appellant first told him he could leave on 15 July 1993. When he later inquired about his departure date,
accused-appellant told him he could leave by the end of July 1993. After July, accused-appellant told him he would leave
on 15 August 1993 together with his uncle Manuel Latina. When he failed to leave on the last mentioned date and accused-
appellant told him he would leave on 28 August 1993, Mascardo told accused-appellant he wanted his money back.
Accused-appellant told him that a refund was not possible since he had already sent the money to his brother-in-law in
Taiwan. Mascardo decided to file a complaint for illegal recruitment on 28 August 1993. On 31 August 1993, he, Manuel
Latina and Ernesto Orcullo went to the Philippine Overseas Employment Administration (POEA) where they found out that
accused-appellant was not a licensed or authorized overseas recruiter.
Ricardo Grepo testified that on 11 August 1993, he went to Borjas house where he met with accused-appellant who
received from him P15,000.00 for placement and processing fees. Accused-appellant told him he could get a job as a factory
worker in Taiwan with a monthly salary of P20,000.00. Accused-appellant gave him a signed typewritten receipt7 and
assured him he could leave for Taiwan on 28 August 1993. Accused-appellant later told him that his visa was not yet ready
and he thereafter learned from Jose Borja that accused-appellant had been arrested for illegal recruitment activities. Grepo
filed his complaint on 30 August 1993.
Lucita Mascardo-Orcullo testified that she is the wife of Ernesto Orcullo, one of the complainants. She stated that on
7 June 1993, she went with her husband to Borjas house where they gave Ernestos passport and other papers to accused-
appellant who assured them that Ernesto could get a job as a factory worker in Taiwan. Lucita further averred that they paid
P15,000.00 to accused-appellant for placement and processing fees as shown by a receipt signed by accused-appellant.
Dionisa Latina testified that she is the wife of complainant Manuel Latina. She stated that on 9 June 1993, she and her
husband went to Borjas house to meet accused-appellant who told them that Manuel could get a job at a toy factory in
Taiwan. They paid P15,000.00 to accused-appellant who issued a receipt9 and assured them Manuel could leave on 30 June
1993. After said date, accused-appellant kept on promising them that Manuel would be able to leave for Taiwan. The
promises were never fulfilled.
Angelina de Luna, a Senior Labor Employment Officer of the POEA, testified that their office received a subpoena
from the trial court requiring the issuance of a certification stating whether or not Tan Tiong Meng alias Tommy Tan was
authorized by the POEA to recruit workers for overseas employment. De Luna presented a certification signed by Ma.
Salome S. Mendoza, Chief, Licensing Branch of the POEA dated 7 July 1994 stating that accused-appellant is neither
licensed nor authorized by the POEA to recruit workers for overseas employment.
ISSUE: WON Illegal Recruitment in Large Scale was committed.
RULING: Yes, It is clear that accused-appellants acts of accepting placement fees from job applicants and representing to
said applicants that he could get them jobs in Taiwan constitute recruitment and placement under the above provision of the
Labor Code.
The Labor Code prohibits any person or entity, not authorized by the POEA, from engaging in recruitment and placement
activities thus:
(a) Any recruitment activities, including the prohibited practices enumerated under Article 34 of this Code, to be
undertaken by non-licensees or non-holders of authority shall be deemed illegal and punishable under Article 39 of this
Code.
xxxx
(b) Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving
economic sabotage and shall be penalized in accordance with Article 39 hereof.
Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring
and/or confederating with one another in carrying out any unlawful or illegal transaction, enterprise or scheme defined under
the first paragraph hereof. Illegal recruitment is deemed committed in large scale if committed against three (3) or more
persons individually or as a group.14

The POEA having certified that accused-appellant is not authorized to recruit workers for overseas employment, it is clear
that the offense committed against the six (6) complainants in this case is illegal recruitment in large scale punishable under
Article 39(a) of the Labor Code with life imprisonment and a fine of One Hundred Thousand Pesos (P100,000.00).
Accused-appellants guilt of six (6) separate crimes of estafa has likewise been proven.

140. PEOPLE VS BAUTISTA, 241 SCRA 216 (1995)

FACTS: Sometime in August 1991, accused Anita Bautista approached Romeo Paguio at the latter's restaurant at 565 Padre
Faura St., Manila, and offered job openings abroad. At that time, Paguio had relatives who were interested to work abroad.
Accused, who also operated a restaurant nearby at Padre Faura, informed Paguio that she knew somebody who could
facilitate immediate employment in Taiwan for Paguio's relatives. Accused Anita Bautista introduced Rosa Abrero to
Paguio. Abrero informed him that the applicants could leave for Taiwan within a period of one-month from the payment of
placement fees. They informed Paguio that the placement fee was P40,000.00 for each person. Paguio contacted his
relatives, complainants Remigio Fortes and Dominador Costales who were his brothers-in-law, and Anastacio Amor, a
cousin, who lost no time raising the needed money and gave the same to Paguio. The three were to work as factory workers
and were to be paid $850.00 monthly salary each. Paguio gave Rosa Abrero P20,000.00, which would be used in following
up the papers of the complainants; later he gave accused P40,000.00 and P60,000.00 in separate amounts, totalling
P100,000.00, as the remaining balance. Abrero and accused Bautista promised Paguio and complainants that the latter could
leave for Taiwan before September 25, 1991. As September 25, 1991 approached, accused Bautista informed Paguio and
complainants that there was a delay in the latter's departure because their tickets and visas had not yet been released. Accused
re-scheduled the complainants' departure to October 10, 1991. Came October 10, 1991, and complainants were still not able
to leave. Paguio then required accused Bautista to sign the "Acknowledgment Receipt," dated October 11, 1991, in which
accused admitted having received the sum of P100,000.00 from Paguio, representing payment of plane tickets, visas and
other travel documents (Exhibit A). Paguio asked accused to return complainants' money; accused, however, promised that
complainants could leave for Taiwan before Christmas. From POEA, Paguio secured a certification, dated January 9, 1992
attesting that Annie Bautista and Rosa Abrero are not licensed or authorized to recruit workers for overseas employment
(Exhibit B). Complainants Fortes, Amor and Costales, as well as Paguio, gave their written statements at the Office of the
Assistant Chief Directorial Staff for Intelligence of the WPDC, complaining about their being victims of illegal recruitment
by Rosa Abrero and Annie Bautista (Exhibits C, D, E and F).

ISSUE: WON Illegal Recruitment in Large Scale has been committed?

RULING: Yes, it is settled that the essential elements of the crime of illegal recruitment in large scale are: (1) the accused
engages in the recruitment and placement of workers, as defined under Article 13 (b) or in any prohibited activities under
Article 34 of the Labor Code; (2) accused has not complied with the guidelines issued by the Secretary of Labor and
Employment, particularly with respect to the securing of a license or an authority to recruit and deploy workers, either
locally or overseas; and (3) accused commits the same against three (3) or more persons, individually or a group.

Appellant's active participation in the recruitment process of complainants belies her claim of innocence. Complainants'
recruitment was initiated by appellant during her initial meeting with Romeo Paguio. She gave the impression to Romeo
Paguio and the complainants that her cohort, Rosa Abrero, could send workers for employment abroad. She introduced
Rosa Abrero to Romeo Paguio. Both women assured the departure of complainants to Taiwan within one month from
payment of the placement fee of P40,000.00 per person. They even claimed that complainants would work as factory
workers for a monthly salary of $850.00 per person. Moreover, it was appellant who informed Romeo Paguio that
complainants' scheduled trip to Taiwan would be on October 10, 1991, instead of the original departure date of September
25, 1991, due to some problems on their visas and travel documents.
Her close association with Rosa Abrero is further strengthened by the Acknowledgment Receipt, dated October 11, 1991,
which was prepared by Romeo Paguio for the protection of complainants. The receipt reads:

ACKNOWLEDGMENT RECEIPT
P100,000.00 October 11, 1991
RECEIVED FROM: ROMEO PAGUIO, the amount of ONE HUNDRED THOUSAND (P100,000.00) PESOS,
Philippine Currency, representing the payment (of) plane ticket, visa and other travel documents.
CONFORME:
By:
(Sgd.) ROMEO PAGUIO (Sgd.) MRS. ANNIE BAUTISTA
c/o Rosa Abrero
SIGNED IN THE PRESENCE OF:
(Sgd.) Anastacio Amor Remigio Fortes
Dominador Costales

Said receipt shows that appellant collected the P100,000.00 for and in behalf of Rosa Abrero, and bolsters Romeo Paguio's
allegation that he gave P20,000.00 to Rosa Abrero, while the rest was received by appellant. Notably, in its Decision, dated
February 14, 1992, the trial court observed:

The denial(s) made by the accused of any participation in the recruitment of the complainants do not persuade. The evidence
at hand shows that she acknowledged in writing the receipt of P100,000.00 from witness Romeo Paguio who was all along
representing the complainants in securing employment for them in Taiwan. Her denial of having actually received the money
in the sum of P100,000.00, the receipt of which she voluntarily signed is not convincing. By her own admission, she is a
restaurant operator. In other words, she is a business woman. As such, she ought to know the consequences in signing any
receipt. That she signed Exh. "A" only goes to show that fact, as claimed by Romeo Paguio, that she actually received the
same.

It is uncontroverted that appellant and Rosa Abrero are not authorized or licensed to engage in recruitment activities. Despite
the absence of such license or authority, appellant participated in the recruitment of complainants. Since there are at least
three (3) victims in this case, appellant is correctly held criminally liable for illegal recruitment in large scale.

141. G.R. No. 97845 September 29, 1994

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
NELIA CORONACION y NOQUE and EDUARDO AQUINO y AQUINO, accused-appellants.

Facts: Hilario with the other applicants submitted their documents to Coronacion and Mendez to work abroad. After the
applicants paid the necessary amount in order to process their applications, Coronacion and party are nowhere to be
found. The Trial Court found the respondents guilty of illegal recruitment, hence this petition.

Issue: W/N Coronacion and party are guilty of illegal recruitment?

Held: Yes. Article 13(b) of the same Code defines recruitment as follows:

"Recruitment and placement" refers to any act of canvassing, enlisting, contracting, transporting,
utilizing, hiring or procuring workers, and includes referrals, contract services, promising or advertising
for employment, locally or abroad, whether for profit or not: Provided, That any person or entity which,
 in any manner, offers or promises for a fee employment to two or more persons shall be deemed engaged
in recruitment and placement.

Evidently, the crime of illegal recruitment in large scale is committed when a person (a) undertakes any recruitment
activity defined under Article 13(b) or any prohibited practice enumerated under Article 34 of the Labor Code; (b) does
not have a license or authority to lawfully engage in the recruitment and placement of workers; and (c) commits the same
against three or more persons, individually or as a group.

A careful examination and evaluation of the testimonies of the complaining witnesses lead to no other conclusion than
that the appellants and their co-accused June Mendez who is still at large, acted in concert in the illegal recruitment
business conducted in the office of appellant Eduardo Aquino with each of them performing acts contributive to the
success of an enterprise designed for mutual benefit and advantage.

Finally, no improper motives to testify falsely against herein appellants and to impute a serious charge against them can
be attributed to herein private complainants. They did not know the appellants before their illegal recruitment so they had
no reason to harbor any spite against them. It is difficult to believe that private complainants would fabricate a story that
would result in appellants' life imprisonment for no other reason than to vindicate their frustrated dreams of employment
abroad. "It is against human nature and experience for strangers to conspire and accuse another stranger of a most serious
crime just to mollify their hurt feelings." 15 The fact that complainants hail from rural areas with no sophisticated
education at all certainly militates against the imputation of any evil motive on their part.

142. G.R. No. 109761 September 1, 1994

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
CARMELITA PUERTOLLANO COMIA, accused-appellant.

Facts: Belloso with three others paid a considerable sum of money to Comia for a janitorial job at Hongkong. After some
time Comia failed to give any receipts to the complainants likewise they never landed any job outside the country
prompting them to file an illegal recruitment against Comia. The trial court found Comia guilty, hence this petition.

Issue: W/N Comia may be convicted of illegal recruitment though there is no proof that the complainants paid any fee?

Held: Yes. Article 38 of the Labor Code provides in part as follows:

Illegal Recruitment. (a) Any recruitment activities, including the prohibited practices enumerated under Article
34 of this Code, to be undertaken by non-licensees or non-holders of authority shall be deemed illegal and
punishable under Article 39 of this Code. The Ministry of Labor and Employment or any law enforcement
officers may initiate complaints under this Article.

(b) Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving
economic sabotage and shall be penalized in accordance with Article 39 hereof.

Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons
conspiring and/or confederating with one another in carrying out any unlawful or illegal transaction, enterprise or
scheme defined under the first paragraph hereof. Illegal recruitment is deemed committed in large scale if
committed against three (3) or more persons individually or as a group.

In this case, the presence of the second and third elements is beyond dispute. That the accused is not authorized by the
Philippine Overseas Employment Administration (POEA) to engage in the recruitment and placement of workers is
evidenced by a certification of the said agency dated 1 October 1991.
Proffered to satisfy the first element of the crime were the testimonies of the complainants pointing to the accused as the
person who promised them employment abroad and who collected and received various amounts from them. The accused
questions the sufficiency of the said testimonies contending that Article 13(b), which defines recruitment and placement,
specifically provides that the offer or promise of employment must be "for a fee" thereby making receipts indispensable in
proving alleged payment. Since none of the four complaining witnesses presented a single receipt to prove alleged
payment of a fee, the accused contends that their claim of payment without being issued receipts defies belief as this fact
is contrary to the ordinary course of nature and ordinary habits of life 14 and runs against the presumption that persons take
ordinary care of their concerns.

The complainants' failure to ask for receipts for the fees they paid to the accused, as well as their consequent failure to
present receipts before the trial court as proof of the said payments, is not fatal to their case. The complainants duly
proved by their respective testimonies that the accused was involved in the entire recruitment process. She gave the
impression that she knows a certain Dr. Zenaida Andres who owns a hospital in Hongkong and has the power to hire
people for janitorial jobs thereat. She relayed the requirements to them, monitored their compliance, and, most especially,
collected and received fees. Their testimonies in this regard, being clear and positive, are sufficient.

ATCI OVERSEAS CORPORATION, AMALIA G. IKDAL and MINISTRY OF PUBLIC HEALTH-KUWAITPetitioners, vs.
MA. JOSEFA ECHIN, Respondent.G.R. No. 178551October 11, 2010
FACTS:
Respondent Echin was hired by petitioner ATCI in behalf of its principal co-petitioner, Ministry of PublicHealth of
Kuwait, for the position of medical technologist under a two-year contract with a monthlysalary of US$1,200.00.Within a
year, Respondent was terminated for not passing the probationaryperiod which was under the Memorandum of
Agreement.Ministry deni
ed respondents request and she
returned to the Philippines shouldering her own fair.Respondent filed with the National Labor Relations Commission
(NLRC) a complaint against ATCI forillegal dismissal. Labor Arbiter rendered judgment in favor of respondent and ordered ATCI
to pay her$3,600.00, her salary for the three months unexpired portion of the contract.
ATCI appealed Labor Arbiters decision, however, NLRC affirmed the latters decision and denie
d
petitioner ATCIs motion for
reconsideration. Petitioner appealed to the Court Appeals contending thattheir principal being a foreign government agency is
immune from suit, and as such, immunity extendedto them.
Appellate Court affirmed NLRCs decision. It noted that under the law, a private employment
agencyshall assume all responsibilities for the implementation of the contract of employment of an overseasworker; hence,
it can be sued jointly and severally with the foreign principal for any violation of therecruitment agreement or contract of
employment.
Petitioners motion for r
econsideration was denied; hence, this present petition.
Issue:
Whether or not petitioners be held liable considering that the contract specifically stipulates that
respondents employment
shall be governed by the Civil Service Law and Regulations of Kuwait.
Ruling:
Court denied the petition. According to RA 8042:

The obligations covenanted in the recruitmentagreement entered into by and between the local agent and its foreign principal are
not coterminouswith the term of such agreement so that if either or both of the parties decide to end the agreement,the
responsibilities of such parties towards the contracted employees under the agreement do not at allend, but the same extends
up to and until the expiration of the employment contracts of the employeesrecruited and employed pursuant to the said recruitment
agreement. In international law, the party whowants to have a foreign law applied to a dispute or case has the burden of
proving the foreign law.Where a foreign law is not pleaded or, even if pleaded, is not proved, the presumption is that foreignlaw is
the same as ours. Thus, we apply Philippine labor laws in determining the issues presented before us
143. COCA-COLA BOTTLERS PHILS., INC. vs. ALAN M. AGITO, et al
GR No. 179546
February 13, 2009
FACTS:
Petitioner (Coke) is a domestic corporation engaged in manufacturing, bottling and distributing soft drink beverages and
other allied products. Respondents were salesmen assigned at Coke Lagro Sales Office for years but were not
regularized. Coke averred that respondents were employees of Interserve who were tasked to perform contracted services
in accordance with the provisions of the Contract of Services executed between Coke and Interserve on 23 March 2002.
Said Contract constituted legitimate job contracting, given that the latter was a bona fide independent contractor with
substantial capital or investment in the form of tools, equipment, and machinery necessary in the conduct of its business.
To prove the status of Interserve as an independent contractor, petitioner presented the following pieces of evidence: (1) the
Articles of Incorporation of Interserve; (2) the Certificate of Registration of Interserve with the Bureau of Internal Revenue;
(3) the Income Tax Return, with Audited Financial Statements, of Interserve for 2001; and (4) the Certificate of Registration
of Interserve as an independent job contractor, issued by the Department of Labor and Employment (DOLE).

As a result, petitioner asserted that respondents were employees of Interserve, since it was the latter which hired them, paid
their wages, and supervised their work, as proven by: (1) respondents Personal Data Files in the records of Interserve; (2)
respondents Contract of Temporary Employment with Interserve; and (3) the payroll records of Interserve.

ISSUES:
1. Whether or not Inteserve is a labor-only contractor;

2. Whether or not an employer-employee relationship exists between petitioner Coca-Cola Bottlers Phils. Inc. and
respondents.

RULING:
At the outset, the Court clarifies that although Interserve has an authorized capital stock amounting to P2,000,000.00,
only P625,000.00 thereof was paid up as of 31 December 2001. The Court does not set an absolute figure for what it
considers substantial capital for an independent job contractor, but it measures the same against the type of work which the
contractor is obligated to perform for the principal. However, this is rendered impossible in this case since the Contract
between petitioner and Interserve does not even specify the work or the project that needs to be performed or completed by
the latters employees, and uses the dubious phrase tasks and activities that are considered contractible under existing laws
and regulations. Even in its pleadings, petitioner carefully sidesteps identifying or describing the exact nature of the
services that Interserve was obligated to render to petitioner. The importance of identifying with particularity the work or
task which Interserve was supposed to accomplish for petitioner becomes even more evident, considering that the Articles
of Incorporation of Interserve states that its primary purpose is to operate, conduct, and maintain the business of janitorial
and allied services. But respondents were hired as salesmen and leadman for petitioner. The Court cannot, under such
ambiguous circumstances, make a reasonable determination if Interserve had substantial capital or investment to undertake
the job it was contracting with petitioner.
[In] Vinoya v. NLRC, we clarified that it was not enough to show substantial capitalization or investment in the form of
tools, equipment, machinery and work premises, etc., to be considered an independent contractor. In fact, jurisprudential
holdings were to the effect that in determining the existence of an independent contractor relationship, several factors may
be considered, such as, but not necessarily confined to, whether the contractor was carrying on an independent business; the
nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance
of specified pieces of work; the control and supervision of the workers; the power of the employer with respect to the hiring,
firing and payment of the workers of the contractor; the control of the premises; the duty to supply premises, tools,
appliances, materials and labor; and the mode, manner and terms of payment.

In sum, Interserve did not have substantial capital or investment in the form of tools, equipment, machineries, and work
premises; and respondents, its supposed employees, performed work which was directly related to the principal business of
petitioner. It is, thus, evident that Interserve falls under the definition of a labor-only contractor, under Article 106 of the
Labor Code; as well as Section 5(i) of the Rules Implementing Articles 106-109 of the Labor Code, as amended. It is also
apparent that Interserve is a labor-only contractor under Section 5(ii) of the Rules Implementing Articles 106-109 of the
Labor Code, as amended, since it did not exercise the right to control the performance of the work of respondents.

The lack of control of Interserve over the respondents can be gleaned from the Contract of Services between Interserve (as
the CONTRACTOR) and petitioner (as the CLIENT). The Contract of Services between Interserve and petitioner did not
identify the work needed to be performed and the final result required to be accomplished. Instead, the Contract specified
the type of workers Interserve must provide petitioner (Route Helpers, Salesmen, Drivers, Clericals, Encoders & PD) and
their qualifications (technical/vocational course graduates, physically fit, of good moral character, and have not been
convicted of any crime). The Contract also states that, to carry out the undertakings specified in the immediately preceding
paragraph, the CONTRACTOR shall employ the necessary personnel, thus, acknowledging that Interserve did not yet have
in its employ the personnel needed by petitioner and would still pick out such personnel based on the criteria provided by
petitioner. In other words, Interserve did not obligate itself to perform an identifiable job, work, or service for petitioner,
but merely bound itself to provide the latter with specific types of employees. These contractual provisions strongly
indicated that Interserve was merely a recruiting and manpower agency providing petitioner with workers performing tasks
directly related to the latters principal business.

The certification issued by the DOLE stating that Interserve is an independent job contractor does not sway this Court to
take it at face value, since the primary purpose stated in the Articles of Incorporation of Interserve is misleading. According
to its Articles of Incorporation, the principal business of Interserve is to provide janitorial and allied services. The delivery
and distribution of Coca-Cola products, the work for which respondents were employed and assigned to petitioner, were in
no way allied to janitorial services. While the DOLE may have found that the capital and/or investments in tools and
equipment of Interserve were sufficient for an independent contractor for janitorial services, this does not mean that such
capital and/or investments were likewise sufficient to maintain an independent contracting business for the delivery and
distribution of Coca-Cola products.

With the finding that Interserve was engaged in prohibited labor-only contracting, petitioner shall be deemed the true
employer of respondents. As regular employees of petitioner, respondents cannot be dismissed except for just or authorized
causes, none of which were alleged or proven to exist in this case, the only defense of petitioner against the charge of illegal
dismissal being that respondents were not its employees. Records also failed to show that petitioner afforded respondents
the twin requirements of procedural due process, i.e., notice and hearing, prior to their dismissal. Respondents were not
served notices informing them of the particular acts for which their dismissal was sought. Nor were they required to give
their side regarding the charges made against them. Certainly, the respondents dismissal was not carried out in accordance
with law and, therefore, illegal.

144. G.R. No. 106341 September 2, 1994

DELFIN G. VILLARAMA, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND GOLDEN DONUTS, INC., respondents.

Facts: DELFIN VILLARAMA was employed by private respondent GOLDEN DONUTS, INC., as its Materials
Manager. On July 15, 1989, petitioner Villarama was charged with sexual harassment by Divina Gonzaga, a clerk-typist
assigned in his department. The humiliating experience compelled her to resign from work. The letter prompted Mr.
Leopoldo Prieto, President of Golden Donuts, Inc., to call petitioner to a meeting on August 4, 1989. Petitioner was then
required to explain the letter against him. It appears that petitioner agreed to tender his resignation. Private respondent
moved swiftly to separate petitioner. Thus, private respondent approved petitioner's application for leave of absence with
pay from August 5-28, 1989. It also issued an inter-office memorandum, dated August 4, 1989, advising "all concerned"
that petitioner was no longer connected with the company effective August 5, 1989. 1 Two (2) days later, or on August 7,
1989, Mr. Prieto sent a letter to petitioner confirming their agreement that petitioner would be officially separated from
the private respondent. For his failure to tender his resignation, petitioner was dismissed by private respondent on August
23, 1989. Feeling aggrieved, petitioner filed an illegal dismissal case 2 against private respondent.

In a decision dated January 23, 1991, Labor Arbiter Salimar V. Nambi held that due process was not observed in the
dismissal of petitioner and there was no valid cause for dismissal. Private respondent GOLDEN DONUTS, INC. was
ordered to: (1) reinstate petitiner DELFIN G. VILLARAMA to his former position, without loss of seniority rights, and
pay his backwages. Hence this petition.

Issue: W/N there was valid cause for the termination of Villarama?

Held: Yes. Petitioner claims that his alleged immoral act was unsubstantiated, hence, he could not be dismissed. We hold
otherwise. The records show that petitioner was confronted with the charge against him. Initially, he voluntarily agreed to
be separated from the company. He took a leave of absence preparatory to this separation. This agreement was confirmed
by the letter to him by Mr. Prieto dated August 7, 1989. A few days after, petitioner reneged on the agreement. He refused
to be terminated on the ground that the seriousness of his offense would not warrant his separation from service. So he
alleged in his letter to Mr. Prieto dated August 16, 1989. But even in this letter, petitioner admitted his "error" vis-a-
vis Miss Gonzaga. As a manager, petitioner should know the evidentiary value of his admissions. Needless to stress, he
cannot complain there was no valid cause for his separation.

As a managerial employee, petitioner is bound by a more exacting work ethics. He failed to live up to this higher
standard of responsibility when he succumbed to his moral perversity. And when such moral perversity is
perpetrated against his subordinate, he provides justifiable ground for his dismissal for lack of trust and
confidence. It is the right, nay, the duty of every employer to protect its employees from over sexed superiors.

To be sure, employers are given wider latitude of discretion in terminating the employment of managerial employees on
the ground of lack of trust and confidence

145. Domingo vs. Rayala (596 SCRA 90)

Domingo vs. Rayala
546 Scra 90

Facts:
Ma. Lourdes T. Domingo (Domingo), then Stenographic Reporter III at the NLRC, filed a Complaint for sexual
harassment against Rayala, the chairman of NLRC.
She alleged that Rayala called her in his office and touched her shoulder, part of her neck then tickled her ears. Rayala
argued that his acts does not constitute sexual harassment because for it to exist, there must be a demand, request or
requirement of sexual favor.
Issue:
Whether or not Rayala commit sexual harassment.

Rulings:
Yes.

The law penalizing sexual harassment in our jurisdiction is RA 7877. Section 3 thereof defines work-related sexual
harassment in this wise:
Sec. 3. Work, Education or Training-related Sexual Harassment Defined. Work, education or training-related sexual
harassment is committed by an employer, manager, supervisor, agent of the employer, teacher, instructor, professor,
coach, trainor, or any other person who, having authority, influence or moral ascendancy over another in a work or
training or education environment, demands, requests or otherwise requires any sexual favor from the other, regardless of
whether the demand, request or requirement for submission is accepted by the object of said Act.
(a) In a work-related or employment environment, sexual harassment is committed when:
(1) The sexual favor is made as a condition in the hiring or in the employment, re-employment or continued employment
of said individual, or in granting said individual favorable compensation, terms, conditions, promotions, or privileges; or
the refusal to grant the sexual favor results in limiting, segregating or classifying the employee which in a way would
discriminate, deprive or diminish employment opportunities or otherwise adversely affect said employee;
. (2) The above acts would impair the employees rights or privileges under existing labor laws; or
. (3) The above acts would result in an intimidating, hostile, or offensive environment for the employee.

even if we were to test Rayalas acts strictly by the standards set in Section 3, RA 7877, he would still be administratively
liable. It is true that this provision calls for a demand, request or requirement of a sexual favor. But it is not necessary
that the demand, request or requirement of a sexual favor be articulated in a categorical oral or written statement. It may
be discerned, with equal certitude, from the acts of the offender. Holding and squeezing Domingos shoulders, running his
fingers across her neck and tickling her ear, having inappropriate conversations with her, giving her money allegedly for
school expenses with a promise of future privileges, and making statements with unmistakable sexual overtones all
these acts of Rayala resound with deafening clarity the unspoken request for a sexual favor.

146. REMINGTON CORP. VS. CASTANEDA

November 20, 2006

G.R. Nos. 169295-96

FACTS: Erlinda Castaneda instituted a complaint for illegal dismissal, underpayment of wages, non-payment of overtime
services, non-payment of SIL pay and non-payment of 13th month pay against Remington Industrial Sales Corp. before
the NLRC-NCR.
Erlinda alleged that she started working in 1983 as company cook for Remington, a corporation engaged in
the trading business and that she continuously worked with Remington until she was unceremoniously prevented from
reporting for work when Remington transferred to a new site.
Remington denied that it dismissed Erlinda illegally. It posited that Erlinda was a domestic helper, not a regular
employee; Erlinda worked as a cook and this job had nothing to do with Remingtons business of trading in construction
or hardware materials, steel plates and wire rope products.
In a Decision, the LA dismissed the complaint and ruled that the respondent was a domestic helper under the personal
service of Antonio Tan (the Managing Director), finding that her work as a cook was not usually necessary and
desirable in the ordinary course of trade and business of the petitioner corporation, and that the latter did not exercise
control over her functions. On the issue of illegal dismissal, the labor arbiter found that it was the respondent who refused
to go with the family of Antonio Tan when the corporation transferred office and that, therefore, respondent could not
have been illegally dismissed.
ISSUE: is Castaneda a regular employee or a domestic servant?
HELD: The petition is DENIED for lack of merit. The assailed Decisions of the CA are AFFIRMED
She is a REGULAR EMPLOYEE

In Apex Mining Company, Inc. v. NLRC, this Court held that a househelper in the staff houses of an industrial company
was a regular employee of the said firm. We ratiocinated that:
Under Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended, the terms househelper or domestic servant are
defined as follows:
The term househelper as used herein is synonymous to the term domestic servant and shall refer to any person,
whether male or female, who renders services in and about the employers home and which services are usually necessary
or desirable for the maintenance and enjoyment thereof, and ministers exclusively to the personal comfort and enjoyment
of the employers family.
The foregoing definition clearly contemplates such househelper or domestic servant who is employed in the employers
home to minister exclusively to the personal comfort and enjoyment of the employers family. Such definition covers
family drivers, domestic servants, laundry women, yayas, gardeners, houseboys and similar househelps.

147. Libres v NLRC G.R. No. 123737. May 28, 1999

J. Bellosillo

Facts:

Petitioner Carlos G. Libres, an electrical engineer, was holding a managerial position with National Steel Corporation
(NSC) as Assistant Manager. He was then asked to comment regarding the charge of sexual harrassment filed against him
by the VP's secretary Capiral. This was included with a waiver of his right tobe heard once he didn't comment.

On 14 August 1993 petitioner submitted his written explanation denying the accusation against him and offering to submit
himself for clarificatory interrogation.

The Management Evaluation Committee said that "touching a female subordinate's hand and shoulder, caressing her nape
and telling other people that Capiral was the one who hugged and kissed or that she responded to the sexual advances are
unauthorized acts that damaged her honor." They suspended Libres for 30 days without pay.

He filed charges against the corporation in the Labor Arbiter, but the latter held that the company acted with due process
and that his punishment was only mild.
Moreover, he assailed the NLRC decision as without basis due to the massaging of her shoulders never discriminated
against her continued employment, impaired her rights and privileges under the Labor Code, or created a hostile,
intimidating or offensive environment.

He claimed that he wasn't guaranteed due process because he wasn't given the right be heard. This was due to his demand
for personal confrontation not being recognized by the MEC.

In the Supreme Court, petitioner assailed the failure of the NLRC to strictly apply RA No. 7877 or the law against sexual
harassment to the instant case. Moreover, petitioner also contends that public respondents reliance on Villarama v. NLRC
and Golden Donuts was misplaced. He draws attention to victim Divina Gonzagas immediate filing of her letter of
resignation in the Villarama case as opposed to the one year delay of Capiral in filing her complaint against him. He now
surmises that the filing of the case against him was merely an afterthought and not borne out of a valid complaint, hence,
the Villarama case should have no bearing on the instant case.

Issue: Was Libres accorded due process when the MEC denied his request for personal confrontatiom?

Held: Yes Petition denied.

Ratio:

On not strictly applying RA 7877- Republic Act No. 7877 was not yet in effect at the time of the occurrence of the act
complained of. It was still being deliberated upon in Congress when petitioners case was decided by the
Labor Arbiter. As a rule, laws shall have no retroactive effect unless otherwise provided, or except in a criminal case
when their application will favor the accused. Hence, the Labor Arbiter have to rely on the MEC report and the
common connotation of sexual harassment as it is generally understood by the public. Faced with the same predicament,
the NLRC had to agree with the Labor Arbiter. In so doing, the NLRC did not commit any abuse of discretion in
affirming the decision of the Labor Arbiter.

On the Villarama afterthought-it was both fitting and appropriate since it singularly addressed the issue of a managerial
employee committing sexual harassment on a subordinate. The disparity in the periods of filing the complaints in the two
(2) cases did not in any way reduce this case into insignificance. On the contrary, it even invited the attention of the Court
to focus on sexual harassment as a just and valid cause for termination. Whereas petitioner Libres was only meted a 30-
day suspension by the NLRC, Villarama, in the other case was penalized with termination. As a managerial employee,
petitioner is bound by more exacting work ethics. He failed to live up to his higher standard of responsibility when he
succumbed to his moral perversity. And when such moral perversity is perpetrated against his subordinate, he provides a
justifiable ground for his dismissal for lack of trust and confidence.

It is the the duty of every employer to protect his employees from oversexed superiors. Public respondent therefore is
correct in its observation that the Labor Arbiter was in fact lenient in his application of the law and jurisprudence for
which petitioner must be grateful for.

As pointed out by the Solicitor General, it could be expected since Libres was Capirals immediate superior. Fear of
retaliation and backlash, not to forget the social humiliation and embarrassment that victims of this human frailty usually
suffer, are all realities that Capiral had to contend with. Moreover, the delay did not detract from the truth derived from
the facts. Petitioner Libres never questioned the veracity of Capirals allegations. In fact his narration even corroborated
the latters assertion in several material points. He only raised issue on the complaints protracted filing.

On the question of due process- Requirements were sufficiently complied with. Due process as a constitutional precept
does not always and in all situations require a trial type proceeding. Due process is satisfied when a person is notified of
the charge against him and given an opportunity to explain or defend himself. The essence of due process is simply to be
heard, or as applied to administrative proceedings, an opportunity to explain ones side, or an opportunity to seek a
reconsideration of the action or ruling complained of.

It is undeniable that petitioner was given a Notice of Investigation informing him of the charge of sexual harassment as
well as advising him to submit a written explanation regarding the matter; that he submitted his written explanation to his
superior. The VP further allowed him to air his grievance in a private session He was given more than adequate
opportunity to explain his side and air his grievances.

Personal confrontation was not necessary. Homeowners v NLRC- litigants may be heard through pleadings, written
explanations, position papers, memoranda or oral arguments.

Book II - Human Resource Development

Part II - Special Workers

148. Zialcita vs. Philippine Airlines Case No. RO4-3-3398-76; February 20, 1977

No full case in the internet -_- ( Cited in the PT&T case)

STIPULATION AGAINST MARRIAGE

FACTS: Zialcita is a stewardess of PAL. She was fired from work because she had gotten married. PAL argued and cited
its policy that stewardesses must be single. The policy also states that subsequent marriage of a stewardess shall
automatically terminate employment.

Zialcita anchored on Article 136 of the Labor Code. PAL sought refuge from Article 132.

Article 132 provides, "Article 132. Facilities for women. The Secretary of Labor and Employment shall establish standards
that will ensure the safety and health of women employees. In appropriate cases, he shall, by regulations, require any
employer to: To determine appropriate minimum age and other standards for retirement or termination in special
occupations such as those of flight attendants and the like."

Article 136 provides, "Article 136. Stipulation against marriage. It shall be unlawful for an employer to require as a condition
of employment or continuation of employment that a woman employee shall not get married, or to stipulate expressly or
tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge,
discriminate or otherwise prejudice a woman employee merely by reason of her marriage."

ISSUE: Whether or not the termination of herein petitioner was valid.

RULING: No, The termination was improper. First of all, during the time Zialcita was terminated, no regulation had yet
been issued by the Secretary of Labor to implement Article 132. Second, even assuming that the Secretary of Labor had
already issued such a regulation and to the effect that stewardesses should remain single, such would be in violation of
Article 136 of the Labor Code.

Article 136's protection of women is broader and more powerful than the regulation provided under Article 132.

149. PT&T vs. NLRC and Grace De Guzman G.R. No. 118978. May 23, 1997

STIPULATION AGAINST MARRIAGE

FACTS: Grace de Guzman was initially hired by petitioner as a reliever, specifically as a Supernumerary Project Worker,
for a fixed period from November 21, 1990 until April 20, 1991 vice one C.F. Tenorio who went on maternity leave. Under
the Reliever Agreement which she signed with petitioner company, her employment was to be immediately terminated upon
expiration of the agreed period. Thereafter, from June 10, 1991 to July 1, 1991, and from July 19, 1991 to August 8, 1991,
private respondents services as reliever were again engaged by petitioner, this time in replacement of one Erlinda F. Dizon
who went on leave during both periods. After August 8, 1991, and pursuant to their Reliever Agreement, her services were
terminated.

On September 2, 1991, private respondent was once more asked to join petitioner company as a probationary employee, the
probationary period to cover 150 days. In the job application form that was furnished her to be filled up for the purpose, she
indicated in the portion for civil status therein that she was single although she had contracted marriage a few months earlier,
that is, on May 26, 1991.

When petitioner supposedly learned about the same later, its branch supervisor in Baguio City, Delia M. Oficial, sent to
private respondent a memorandum dated January 15, 1992 requiring her to explain the discrepancy. In that memorandum,
she was reminded about the companys policy of not accepting married women for employment.

In her reply letter dated January 17, 1992, private respondent stated that she was not aware of PT&Ts policy regarding
married women at the time, and that all along she had not deliberately hidden her true civil status. Petitioner nonetheless
remained unconvinced by her explanations. Private respondent was dismissed from the company effective January 29, 1992,
which she readily contested by initiating a complaint for illegal dismissal, coupled with a claim for non-payment of cost of
living allowances (COLA), before the Regional Arbitration Branch of the National Labor Relations Commission in Baguio
City.

Labor Arbiter Ruling - private respondent was illegally dismissed because she already gained the status of a regular
employee.

NLRC Ruling - affirmed the LA ruling.

Hence the instant petition.

ISSUE: Whether or not the termination of herein private respondent was on a valid and just cause.

RULING: No, the dismissal was illegal.

Constitutional Safeguards - The Constitution, cognizant of the disparity in rights between men and women in almost all
phases of social and political life, provides a gamut of protective provisions. To cite a few of the primordial ones, Section
14, Article II on the Declaration of Principles and State Policies, expressly recognizes the role of women in nation-
building and commands the State to ensure, at all times, the fundamental equality before the law of women and men.
Corollary thereto, Section 3 of Article XIII (the progenitor whereof dates back to both the 1935 and 1973 Constitution)
pointedly requires the State to afford full protection to labor and to promote full employment and equality of
employment opportunities for all, including an assurance of entitlement to tenurial security of all workers. Similarly,
Section 14 of Article XIII mandates that the State shall protect working women through provisions for opportunities that
would enable them to reach their full potential.

Article 135 Labor Code - Discrimination prohibited. It shall be unlawful for any employer to discriminate against any
woman employee with respect to terms and conditions of employment solely on account of her sex.The following are acts
of discrimination:

1.Payment of a lesser compensation, including wage, salary or other form of remuneration and fringe benefits, to a
female employees as against a male employee, for work of equal value; and

2.Favoring a male employee over a female employee with respect to promotion, training opportunities, study and
scholarship grants solely on account of their sexes.

Article 136 of the Labor Code - Stipulation against marriage. - It shall be unlawful for an employer to require as a condition
of employment or continuation of employment that a woman shall not get married, or to stipulate expressly or tacitly that
upon getting married, a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge,
discriminate or otherwise prejudice a woman employee merely by reason of marriage.

In the case at bar, petitioners policy of not accepting or considering as disqualified from work any woman worker who
contracts marriage runs afoul of the test of, and the right against, discrimination, afforded all women workers by our labor
laws and by no less than the Constitution. Contrary to petitioners assertion that it dismissed private respondent from
employment on account of her dishonesty, the record discloses clearly that her ties with the company were dissolved
principally because of the companys policy that married women are not qualified for employment in PT&T, and not merely
because of her supposed acts of dishonesty.

The primary standard of determining regular employment is the reasonable connection between the activity performed by
the employee in relation to the business or trade of the employer. As an employee who had therefore gained regular status,
and as she had been dismissed without just cause, she is entitled to reinstatement without loss of seniority rights and other
privileges and to full back wages, inclusive of allowances and other benefits or their monetary equivalent.

150. Nitto Enterprises vs NLRC and Roberto Capili G.R. No. 114337 September 29, 1995

Condition sine qua non of Apprenticeship

FACTS: Petitioner Nitto Enterprises, a company engaged in the sale of glass and aluminum products, hired Roberto Capili
sometime in May 1990 as an apprentice machinist, molder and core maker as evidenced by an apprenticeship agreement2
for a period of six (6) months from May 28, 1990 to November 28, 1990 with a daily wage rate of P66.75 which was 75%
of the applicable minimum wage.
At around 1:00 p.m. of August 2, 1990, Roberto Capili who was handling a piece of glass which he was working on,
accidentally hit and injured the leg of an office secretary who was treated at a nearby hospital.

Later that same day, after office hours, private respondent entered a workshop within the office premises which was not his
work station. There, he operated one of the power press machines without authority and in the process injured his left thumb.
Petitioner spent the amount of P1,023.04 to cover the medication of private respondent.

The following day he received a letter asking respondent to resign.

On August 3, 1990 private respondent executed a Quitclaim and Release in favor of petitioner for and in consideration of
the sum of P1,912.79.4

Three days after, or on August 6, 1990, private respondent formally filed before the NLRC Arbitration Branch, National
Capital Region a complaint for illegal dismissal and payment of other monetary benefits.

ISSUE: Whether or Not Respondent was illegally dismissed.

Petitioners Contention - No employee - employer relationship

RULING: Yes. Respondent was illegally dismissed.

Labor Arbiters Ruling - Respondent was validly dismissed.

NLRC Ruling - Reversed the ruling of the LA, stating that respondent was illegally dismissed.

The NLRC declared that private respondent was a regular employee of petitioner by ruling thus:

As correctly pointed out by the complainant, we cannot understand how an apprenticeship agreement filed with the
Department of Labor only on June 7, 1990 could be validly used by the Labor Arbiter as basis to conclude that the
complainant was hired by respondent as a plain "apprentice" on May 28, 1990. Clearly, therefore, the complainant was
respondent's regular employee under Article 280 of the Labor Code, as early as May 28,1990, who thus enjoyed the security
of tenure guaranteed in Section 3, Article XIII of our 1987 Constitution.

Supreme Court Ruling - Petition has no merit. NLRC RULING AFFIRMED

Article Article 61 of the Labor Code provides:

Contents of apprenticeship agreement. Apprenticeship agreements, including the main rates of apprentices, shall conform
to the rules issued by the Minister of Labor and Employment. The period of apprenticeship shall not exceed six months.
Apprenticeship agreements providing for wage rates below the legal minimum wage, which in no case shall start below
75% per cent of the applicable minimum wage, may be entered into only in accordance with apprenticeship program duly
approved by the Minister of Labor and Employment. The Ministry shall develop standard model programs of
apprenticeship. (emphasis supplied)

Apprenticeship agreements entered into by the employer and apprentice shall be entered only in accordance with the
apprenticeship program duly approved by the Minister of Labor and

To translate such objectives into existence, prior approval of the DOLE to any apprenticeship program has to be secured as
a condition sine qua non before any such apprenticeship agreement can be fully enforced. The role of the DOLE in
apprenticeship programs and agreements cannot be debased.

Hence, since the apprenticeship agreement between petitioner and private respondent has no force and effect in the absence
of a valid apprenticeship program duly approved by the DOLE, private respondent's assertion that he was hired not as an
apprentice but as a delivery boy ("kargador" or "pahinante") deserves credence. He should rightly be considered as a regular
employee of petitioner as defined by Article 280 of the Labor Code.
151. Flamer Christian Institute vs. CA and Heirs of Kapunan G.R. No. 75112 August 17, 1992

IMPLEMENTING RULES OF LABOR CODE VS. SUBSTANTIVE LAW UNDER CIVIL CODE

FACTS:

(G.R. No. 75112 October 16, 1990 - Criminal Case)

Private respondent Potenciano Kapunan, Sr., an eighty-two-year old retired schoolteacher (now deceased), was struck by
the Pinoy jeep owned by petitioner Filamer and driven by its alleged employee, Funtecha, as Kapunan, Sr. was walking
along Roxas Avenue, Roxas City at 6:30 in the evening of October 20, 1977. As a result of the accident, Kapunan, Sr.
suffered multiple injuries for which he was hospitalized for a total of twenty (20) days.

Evidence showed that at the precise time of the vehicular accident, only one headlight of the jeep was functioning. Funtecha,
who only had a student driver's permit, was driving after having persuaded Allan Masa, the authorized driver, to turn over
the wheels to him. The two fled from the scene after the incident. A tricycle driver brought the unconscious victim to the
hospital.

(G.R. No. 75112 August 17, 1992 - Civil Case, Present)

Under review is the appellate court's conclusion that there exists an employer-employee relationship between the petitioner
and its co-defendant Funtecha. The Court ruled that the petitioner is not liable for the injuries caused by Funtecha on the
grounds that the latter was not an authorized driver for whose acts the petitioner shall be directly and primarily answerable,
and that Funtecha was merely a working scholar who, under Section 14, Rule X, Book III of the Rules and Regulations
Implementing the Labor Code is not considered an employee of the petitioner.

The private respondents assert that the circumstances obtaining in the present case call for the application of Article
2180 of the Civil Code since Funtecha is no doubt an employee of the petitioner.

It is undisputed that Funtecha was a working student, being a part-time janitor and a scholar of petitioner Filamer. He was,
in relation to the school, an employee even if he was assigned to clean the school premises for only two (2) hours in the
morning of each school day.

Having a student driver's license, Funtecha requested the driver, Allan Masa, and was allowed, to take over the vehicle
while the latter was on his way home one late afternoon. It is significant to note that the place where Allan lives is also the
house of his father, the school president, Agustin Masa. Moreover, it is also the house where Funtecha was allowed free
board while he was a student of Filamer Christian Institute.

ISSUE: Whether or Not Funtecha is an employee of herein petitioner.

RULING: Yes, Funtecha is an employee of herein petitioner.

Funtecha is an employee of petitioner Filamer. He need not have an official appointment for a driver's position in order that
the petitioner may be held responsible for his grossly negligent act, it being sufficient that the act of driving at the time of
the incident was for the benefit of the petitioner. Hence, the fact that Funtecha was not the school driver or was not acting
within the scope of his janitorial duties does not relieve the petitioner of the burden of rebutting the presumption juris tantum
that there was negligence on its part either in the selection of a servant or employee, or in the supervision over him. The
petitioner has failed to show proof of its having exercised the required diligence of a good father of a family over its
employees Funtecha and Allan.

The Court reiterates that supervision includes the formulation of suitable rules and regulations for the guidance of its
employees and the issuance of proper instructions intended for the protection of the public and persons with whom the
employer has relations through his employees.

The defense of petitioner anchored under the IRR of Section 14, Rule X of Book III of the Labor Code is without merit.
Rule X is merely a guide to the enforcement of the substantive law on labor. The Court, thus, makes the distinction and so
holds that Section 14, Rule X, Book III of the Rules is not the decisive law in a civil suit for damages instituted by an injured
person during a vehicular accident against a working student of a school and against the school itself.

The present case does not deal with a labor dispute on conditions of employment between an alleged employee and an
alleged employer. It invokes a claim brought by one for damages for injury caused by the patently negligent acts of a person,
against both doer-employee and his employer. Hence, the reliance on the implementing rule on labor to disregard the primary
liability of an employer under Article 2180 of the Civil Code is misplaced. An implementing rule on labor cannot be used
by an employer as a shield to avoid liability under the substantive provisions of the Civil Code.

There is evidence to show that there exists in the present case an extra-contractual obligation arising from the negligence or
reckless imprudence of a person "whose acts or omissions are imputable, by a legal fiction, to other(s) who are in a position
to exercise an absolute or limited control over (him).

152. OLYMPIA GUALBERTO, petitioner vs MARINDUQUE MINING & INDUSTRIAL CORP., respondent 23 CAR
528 June 28, 1978

No Full Case in the internet, CA -_- ( cited in the PT&T case )

STIPULATION AGAINST MARRIAGE

FACTS:
The company employed plaintiff Olympia Gualberto as a dentist in 1971 while she was still single. She married Roberto,
another employee (electrical engineer) of the company, in 1972. The company informed her that she was regarded to have
resigned her office, invoking the firms policy that stipulated that female employees were regarded to automatically
terminate their employment the moment they got married. Olympia filed a claim for compensation.

The Court of Appeals not only upheld her claim for damages but also awarded exemplary damages, and held, inter alia: No
employer may require female applicants for jobs to enter into pre-employment arrangements that they would be dismissed
once they get married and afterwards expect the Courts to sustain such an agreement.

ISSUE:Whether or not an employer may terminate an employee by reason of marriage.

RULING: No.The Court made references to the Civil Code, the Woman and Child Labor Act and the 1935 Constitution of
the Philippines. In light of this the Court further stated: The agreement which the appellants want this Court to sustain on
appeal is an example of discriminatory chauvinism. Acts which deny equal employment opportunities to women because
of their sex are inherently odious and must be struck down.

BOOK III - Conditions of Employment

Part I - Working Conditions

153. Sevilla vs. CA and TOURIST WORLD SERVICE, INC., ELISEO S.CANILAO, and SEGUNDINA NOGUERA -
G.R. No. L-41182-3 April 16, 1988

EMPLOYEE - EMPLOYER RELATIONSHIP

FACTS: Segundina Noguera (leasor) entered into a contract of lease with Tourist World Server, represented by Canilao and
Petitioner Lina Sevilla, the latter holding herself solidarily liable with the payment of rent.

When the branch office was opened, the same was run by the herein appellant Lina 0. Sevilla payable to Tourist World
Service Inc. by any airline for any fare brought in on the efforts of Mrs. Lina Sevilla, 4% was to go to Lina Sevilla and 3%
was to be withheld by the Tourist World Service, Inc., the former was also designated as the branch manager of said office.
On or about November 24, 1961 the Tourist World Service, Inc. appears to have been informed that Lina Sevilla was
connected with a rival firm, the Philippine Travel Bureau, and, since the branch office was anyhow losing, the Tourist World
Service considered closing down its office. This was firmed up by two resolutions of the board of directors of Tourist World
Service, Inc. dated Dec. 2, 1961 , the first abolishing the office of the manager and vice-president of the Tourist World
Service, Inc., Ermita Branch, and the second,authorizing the corporate secretary to receive the properties of the Tourist
World Service then located at the said branch office.

Because of this, and to comply with the mandate of the Tourist World Service, the corporate secretary Gabino Canilao went
over to the branch office, and, finding the premises locked, and, being unable to contact Lina Sevilla, he padlocked the
premises on June 4, 1962 to protect the interests of the Tourist World Service. When neither the appellant Lina Sevilla nor
any of her employees could enter the locked premises, a complaint was filed by the herein appellants against the appellees
with a prayer for the issuance of mandatory preliminary injunction. Both appellees answered with counterclaims.

Appealant Lina Sevilla claims that a joint bussiness venture was entered into by and between her and appellee TWS.

While TWS claims that Sevilla is only an employee with a designation of branch manager.

Trial Court held for the private respondent on the premise that the private respondent, Tourist World Service, Inc., being
the true lessee, it was within its prerogative to terminate the lease and padlock the premises. 3 It likewise found the
petitioner, Lina Sevilla, to be a mere employee of said Tourist World Service, Inc. and as such, she was bound by the acts
of her employer. The respondent Court of Appeal rendered an affirmance

ISSUE:Whether or not an employee - employer relationship exist as to unilaterally close the premise without the knowledge
and consent of the appellant Lina Sevilla.

RULING: No, there exist no employee - employer relationship.

In this jurisdiction, there has been no uniform test to determine the evidence of an employer-employee relation. In general,
we have relied on the so-called right of control test, "where the person for whom the services are performed reserves a right
to control not only the end to be achieved but also the means to be used in reaching such end." 10Subsequently, however,
we have considered, in addition to the standard of right-of control, the existing economic conditions prevailing between the
parties, like the inclusion of the employee in the payrolls, in determining the existence of an employer-employee
relationship.

The records will show that the petitioner, Lina Sevilla, was not subject to control by the private respondent Tourist World
Service, Inc., either as to the result of the enterprise or as to the means used in connection therewith. In the first place, under
the contract of lease covering the Tourist Worlds Ermita office, she had bound herself in solidum as and for rental payments,
an arrangement that would be like claims of a master-servant relationship. True the respondent Court would later minimize
her participation in the lease as one of mere guaranty, 12 that does not make her an employee of Tourist World, since in any
case, a true employee cannot be made to part with his own money in pursuance of his employer's business, or otherwise,
assume any liability thereof. In that event, the parties must be bound by some other relation, but certainly not employment.

The fact that Sevilla had been designated 'branch manager" does not make her, ergo, Tourist World's employee. As we said,
employment is determined by the right-of-control test and certain economic parameters. But titles are weak indicators.

In rejecting Tourist World Service, Inc.'s arguments however, we are not, as a consequence, accepting Lina Sevilla's own,
that is, that the parties had embarked on a joint venture or otherwise, a partnership.

It is the Court's considered opinion, that when the petitioner, Lina Sevilla, agreed to (wo)man the private respondent, Tourist
World Service, Inc.'s Ermita office, she must have done so pursuant to a contract of agency.
But unlike simple grants of a power of attorney, the agency that we hereby declare to be compatible with the intent of the
parties, cannot be revoked at will. The reason is that it is one coupled with an interest, the agency having been created for
mutual interest, of the agent and the principal. 19 It appears that Lina Sevilla is a bona fide travel agent herself, and as such,
she had acquired an interest in the business entrusted to her. Moreover, she had assumed a personal obligation for the
operation thereof, holding herself solidarily liable for the payment of rentals. She continued the business, using her own
name, after Tourist World had stopped further operations. Her interest, obviously, is not to the commissions she earned as
a result of her business transactions, but one that extends to the very subject matter of the power of management delegated
to her. It is an agency that, as we said, cannot be revoked at the pleasure of the principal. Accordingly, the revocation
complained of should entitle the petitioner, Lina Sevilla, to damages.

154. Brotherhood Labor Unity Movement of the Philippines vs. Zamora G.R. No. L-48645 January 7, 1987

EMPLOYEE - EMPLOYER RELATIONSHIP

FACTS: BLUM filed a complaint with the now defunct Court of Industrial Relations, charging San Miguel Corporation,
and the following officers: Enrique Camahort, Federico Ofiate Feliciano Arceo, Melencio Eugenia Jr., Ernesto Villanueva,
Antonio Bocaling and Godofredo Cueto of unfair labor practice as set forth in Section 4 (a), sub-sections (1) and (4) of
Republic Act No. 875 and of Legal dismissal. It was alleged that respondents ordered the individual complainants to
disaffiliate from the complainant union; and that management dismissed the individual complainants when they insisted on
their union membership.

On their part, respondents moved for the dismissal of the complaint on the grounds that the complainants are not and have
never been employees of respondent company but employees of the independent contractor; that respondent company has
never had control over the means and methods followed by the independent contractor who enjoyed full authority to hire
and control said employees; and that the individual complainants are barred by estoppel from asserting that they are
employees of respondent company.

Unrebutted evidence and testimony on record establish that the petitioners are workers who have been employed at the San
Miguel Parola Glass Factory since 1961, averaging about seven (7) years of service at the time of their termination. They
worked as "cargadores" or "pahinante" at the SMC Plant loading, unloading, piling or palleting empty bottles and woosen
shells to and from company trucks and warehouses. At times, they accompanied the company trucks on their delivery routes.

San Miguel refused to bargain with the petitioner union alleging that the workers are not their employees.

On February 20, 1969, all the petitioners were dismissed from their jobs and, thereafter, denied entrance to respondent
company's glass factory despite their regularly reporting for work. A complaint for illegal dismissal and unfair labor practice
was filed by the petitioners.

The case reaches us now with the same issues to be resolved as when it had begun.

ISSUE: Whether or not there exist an employee- employer relationship.

RULING: YES!

In determining the existence of an employer-employee relationship, the elements that are generally considered are the
following: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d)
the employer's power to control the employee with respect to the means and methods by which the work is to be
accomplished. It. is the called "control test" that is the most important element.
Applying the above criteria, the evidence strongly indicates the existence of an employer-employee relationship between
petitioner workers and respondent San Miguel Corporation.

The respondent asserts that the petitioners are employees of the Guaranteed Labor Contractor, an independent labor
contracting firm.

The existence of an independent contractor relationship is generally established by the following criteria: "whether or not
the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and
duration of the relationship; the right to assign the performance of a specified piece of work; the control and supervision of
the work to another; the employer's power with respect to the hiring, firing and payment of the contractor's workers; the
control of the premises; the duty to supply the premises tools, appliances, materials and labor; and the mode, manner and
terms of payment".

None of the above criteria exists in the case at bar.

155 Article 82 LC; Hours of Work; Coverage

National Waterworks & Sewerage Authority vs. NWSA Consolidated Unions
11 SCRA 766, August 31, 1964

FACTS:
Petitioner National Waterworks & Sewerage Authority is a government-owned and controlled corporation created under
Republic Act No. 1383, while respondent NWSA Consolidated Unions are various labor organizations composed of laborers
and employees of the NAWASA. The other respondents are intervenors Jesus Centeno, et al., hereinafter referred to as
intervenors.

The Court of Industrial Relations conducted a hearing on the controversy then existing between petitioner and respondent
unions which the latter embodied in a "Manifesto", namely: implementation of the 40-Hour Week Law (Republic Act No.
1880); alleged violations of the collective bargaining agreement concerning "distress pay"; minimum wage of P5.25;
promotional appointments and filling of vacancies of newly created positions; additional compensation for night work; wage
increases to some laborers and employees; and strike duration pay. In addition, respondent unions raised the issue of whether
the 25% additional compensation for Sunday work should be included in computing the daily wage and whether, in
determining the daily wage of a monthly-salaried employee, the salary should be divided by 30 days. Also, the method used
by the NAWASA in offsetting the overtime with the undertime and at the same time charging said undertime to the accrued
leave.

The respondent court rendered its decision stating that the NAWASA is an agency not performing governmental functions
and, therefore, is liable to pay additional compensation for work on Sundays and legal holidays conformably to
Commonwealth Act No. 444, known as the Eight-Hour Labor Law and granted the claims of the union.

ISSUE:
(1) Whether or not the method used by the NAWASA in offsetting the overtime with the undertime and at the same
time charging said undertime to the accrued leave is correct.
(2) Whether or not Differential pay for Sundays is part of legal wage.
 (3) What is the correct method to determine the equivalent daily wage of a monthly salaried employee, especially in a
firm which is a public utility?

HELD:
(1) No, the method used by the NAWASA in offsetting the overtime with the undertime and at the same time charging
said undertime to the accrued leave is NOT correct.

There is merit in the decision of respondent court that the method used by petitioner in offsetting the overtime
with the undertime and at the same time charging said undertime to the accrued leave of the employee is unfair,
for under such method the employee is made to pay twice for his undertime because his leave is reduced to that
extent while he was made to pay for it with work beyond the regular working hours. The proper method should be
to deduct the undertime from the accrued leave but pay the employee the overtime to which he is entitled. This
method also obviates the irregular schedule that would result if the overtime should be set off against the
undertime for that would place the schedule for working hours dependent on the employee.

(2) Yes, Differential pay for Sundays is part of legal wage.

The differential pay for Sundays is a part of the legal wage. We likewise agree with petitioner that a public utility
is exempt from paying additional compensation for work on Sundays and legal holidays conformably to Section 4
of Commonwealth Act No. 444 which provides that the prohibition, regarding employment of Sundays and holidays
unless an additional sum of 25% of the employee's regular remuneration is paid shall not apply to public utilities
such as those supplying gas, electricity, power, water or providing means of transportation or communication. In
other words, the employees and laborers of NAWASA can be made to work on Sundays and legal holidays without
being required to pay them an additional compensation of 25%.

It is to be noted, however, that in the case at bar it has been stipulated that prior to the enactment of Republic Act
No. 1880, providing for the implementation of the 40-Hour Week Law, the Metropolitan Water District had been
paying 25% additional compensation for work on Sundays and legal holidays to its employees and laborers by
virtue of Resolution No. 47, series of 1948, of its board of Directors, which practice was continued by the NAWASA
when the latter took over the service. And in the collective bargaining agreement entered into between the
NAWASA and respondent unions it was agreed that all existing benefits enjoyed by the employees and laborers
prior to its effectivity shall remain in force and shall form part of the agreement, among which certainly is the 25%
additional compensation for work on Sundays and legal holidays therefore enjoyed by said laborers and employees.
It may, therefore, be said that while under Commonwealth Act No. 444 a public utility is not required to pay
additional compensation to its employees and workers for work done on Sundays and legal holidays, there is,
however, no prohibition for it to pay such additional compensation if it voluntarily agrees to do so. The NAWASA
committed itself to pay this additional compensation. It must pay not because of compulsion of law but because of
contractual obligation.

(3) Correct method to determine the equivalent daily wage of a monthly salaried employee, especially in a firm which
is a public utility.

It is evident that Republic Act 1880 does not intend to raise the wages of the employees over what they are
actually receiving. Rather, its purpose is to limit the working days in a week to five days, or to 40 hours without
however permitting any reduction in the weekly or daily wage of the compensation which was previously
received.

a. It has been held that for purposes of computing overtime compensation a regular wage includes all
payments which the parties have agreed shall be received during the work week, including piece work
 wages, differential payments for working at undesirable times, such as at night or on Sundays and holidays,
and the cost of board and lodging customarily furnished the employee. The "regular rate" of pay also
ordinarily includes incentive bonus or profit-sharing payments made in addition to the normal basic pay,
and it was also held that the higher rate for night, Sunday and holiday work is just as much a regular rate as
the lower rate for daytime work. The higher rate is merely an inducement to accept employment at times
which are not as desirable from a workman's standpoint

b. The way to determine the daily rate of a monthly employee is to divide the monthly salary by the actual
number of working hours in the month. Thus, Section 8 (g) of Republic Act No. 1161, as amended by
Republic Act 1792, provides that the daily rate of compensation is the total regular compensation for the
customary number of hours worked each day. In other words, the correct computation shall be (a) the
monthly salary divided by the actual of working hours in a month or (b) the regular monthly compensation
divided by the number of working days in a month.

156 Article 82 LC; Hours of Work; Coverage

San Miguel Brewery, Inc. vs. Democratic Labor Org.
8 SCRA 613, July 31, 1963

FACTS:

Respondent Democratic Labor Assoc. filed a manifestation claiming for the following against petitioner SMB: overtime
pay, night-shift differential pay, attorneys fees. Separation pay, and sick and vacation leave compensation. Judge Bautista,
who was commissioned to receive the evidence and decide on the case, ruled that those working outside the companys
premises are entitled to overtime compensation, hence, the Eight-Hour Labor Law applies to them.

ISSUE:
(1) Whether or not the Eight-Hour Labor Law finds application to outside of field sales personnel (paid on a piece-
work or pakiao).
(2) Whether or not the claimants who are watchmen and security guards entitled to extra pay for work done on
Sundays and Holidays.

HELD:

(1) No, the Eight-Hour Labor Law finds NO application to outside of field sales personnel.

Where after the morning roll call the outside or field sales personnel leave the plant of the company to go on their
respective sales routes and they do not have a daily time record but the sales routes are so planned that they can be
completed within 8 hours at most, and they receive monthly salaries and sales commissions in variable amounts, so
that they are made to work beyond the required eight hours similar to piece work, "pakiao", or commission basis
regardless of the time employed, and the employees' participation depends on their industry, it is held that the Eight-
Hour Labor Law has no application to said outside or field sales personnel and that they are not entitled to overtime
compensation.

The Court is of opinion that the Eight-Hour Labor Law only has application where an employee or laborer is paid
on a monthly or daily basis, or is paid a monthly or daily compensation, in which case, if he is made to work beyond
the requisite period of 8 hours, he should be paid the additional compensation prescribed by law. This law has no
application when the employee or laborer is paid on a piece-work, "pakiao", or commission basis, regardless of the
time employed. The philosophy behind this exemption is that his earnings in the form of commission based on the
 gross receipts of the day. His participation depends upon his industry so that the more hours he employs in the work
the greater are his gross returns and the higher his commission.

(2) Yes, the claimants who are watchmen and security guards entitled to extra pay for work done on Sundays and
Holidays.

Watchmen who work on Sundays and holidays are entitled to extra pay for work done during these days although
they are paid on a monthly basis and are given one day off. Section 4 of Commonwealth Act No. 444 expressly
provides that no employer may compel an employee to work during Sundays and legal holidays unless he is paid
an additional sum of his regular compensation. This proviso is mandatory, regardless of the nature of the
compensation. The only exception is with regard to public utilities who perform some public service.
157 Article 83-84 LC; Hours of Work; Normal Hours of Work; Hours of Work
Arica vs. National Labor Relations Commission
170 SCRA 776, February 28, 1989

FACTS:

Teofilo Arica et al and 561 others sued Standard Fruits Corporation (STANFILCO) Philippines for allegedly not paying the
workers for their assembly time which takes place every work day from 5:30am to 6am. The assembly time consists of the
roll call of the workers; their getting of assignments from the foreman; their filling out of the Laborers Daily
Accomplishment Report; their getting of tools and equipments from the stockroom; and their going to the field to work. The
workers alleged that this is necessarily and primarily for STANFILCOs benefit.

ISSUE: Whether or not the workers assembly time should be paid.

HELD:

No, the workers assembly time should not be paid.

The very same claim having been brought against herein respondent by the same group of rank and file employees in the
case of Associated Labor Union and Standard Fruit Corporation, NLRC Case No. 26-LS-XI-76 which was filed way back
April 27, 1976 when ALU was the bargaining agent of respondent's rank and file workers. The said case involved a claim
for "waiting time", as the complainants purportedly were required to assemble at a designated area at least 30 minutes prior
to the start of their scheduled working hours "to ascertain the work force available for the day by means of a roll call, for
the purpose of assignment or reassignment of employees to such areas in the plantation where they are most needed."

Noteworthy is the decision of the Minister of Labor, on May 12, 1978 in the aforecited case (Associated Labor Union vs.
Standard (Phil.) Fruit Corporation, NLRC Case No. 26-LS-XI-76) where significant findings of facts and conclusions had
already been made on the matter. The Minister of Labor held: The thirty (30)-minute assembly time long practiced and
institutionalized by mutual consent of the parties under Article IV, Section 3, of the Collective Bargaining Agreement cannot
be considered as waiting time within the purview of Section 5, Rule I, Book III of the Rules and Regulations Implementing
the Labor Code. x x x Furthermore, the thirty (30)-minute assembly is a deeply-rooted, routinary practice of the employees,
and the proceedings attendant thereto are not infected with complexities as to deprive the workers the time to attend to other
personal pursuits. They are not new employees as to require the company to deliver long briefings regarding their respective
work assignments. Their houses are situated right on the area where the farms are located, such that after the roll call, which
does not necessarily require the personal presence, they can go back to their houses to attend to some chores. In short, they
are not subject to the absolute control of the company during this period, otherwise, their failure to report in the assembly
time would justify the company to impose disciplinary measures.
159 Article 87 LC; Hours of Work; Overtime Pay; Premium Pay; Regular Wage
Emirate Security and Maintenance Systems, Inc. vs. Menese
658 SCRA 712, October 05, 2011

FACTS:

Respondent Glenda M. Menese (Menese) was a payroll and billing clerk of petitioner Emirate Security and Maintenance
System, Inc. (Agency) assigned to its security detachment at the Philippine General Hospital (PGH). In two memoranda
dated May 16, 2011 and May 22, 2001, respondent was transferred to petitioners main office on Ortigas Ave., Mandaluyong
City, as lady security guard. Her old position was taken over by a certain Amy Claro, a protge of Violita G. Depula, the
new chief of the UP-PGH Security Division. On June 5, 2001, respondent Menese filed a complaint for constructive
dismissal; illegal reduction of salaries and allowances; separation pay; refund of contribution to cash bond; overtime,
holiday, rest day and premium pay; damages; and attorney's fees against the petitioners, Agency and its General Manager,
Robert A. Yan (Yan).

The petitioners, for their part, denied liability. They alleged that on May 8, 2001, Dapula informed the agency in writing,
through Yan, that she had been receiving numerous complaints from security guards and other agency employees about
Meneses unprofessional conduct. She told the petitioners that she was not tolerating Meneses negative work attitude despite
the fact that she is the wife of Special Police Major Divino Menese who is a member of the UP Manila police force, and
that as a matter of policy and out of delicadeza, she does not condone nepotism in her division.

In a decision dated March 14, 2002, Labor Arbiter Jovencio LL. Mayor, Jr. declared Menese to have been constructively
dismissed. He found the petitioners wanting in good faith in transferring Menese to another detachment as she would be
suffering a demotion in rank and a diminution in pay. Accordingly, he ordered the petitioners to immediately reinstate
Menese and, solidarily, to pay her full backwages. The petitioners appealed to the National Labor Relations Commission
(NLRC). On September 30, 2003, the NLRC Second Division issued a resolution granting the appeal and reversing the
labor arbiters decision. It ruled that Menese was not constructively dismissed but was merely transferred to another
detachment. The Court of Appeals set-aside the ruling of the NLRC and reinstated the Labor Arbiters decision. Thus, this
petition.

ISSUE: Whether or not the Respondent was constructively dismissed and whether or not Respondent is entitled to
overtime pay, among others.

HELD:

Yes, the Respondent was constructively dismissed and whether or not Respondent is entitled to overtime pay, among others.

The Court notes as a starting point that at the time material to the case, Menese ceased to be the agencys payroll and billing
clerk at its PGH detachment. The position was taken away from her as she had been transferred to the agencys main office
on Ortigas Avenue, Mandaluyong City, upon the request of Dapula, the new chief of the UP-PGH Security Division. The
transfer was to be carried out through a memorandum dated May 16, 2001 issued by Yan; a second memorandum dated
May 22, 2001 issued by Personnel Officer Edwin J. Yabes, reminding Menese of Yans instruction for her to report to the
main office; and a third memorandum dated May 28, 2001, also issued by Yabes informing Menese that it was her second
notice to assume her work detail at the main office. Yabes instructed her to report for work on May 30, 2001.

Had Yan inquired into Dapulas claim of Meneses alleged unprofessionalism, ideally through an administrative investigation,
he could have been provided with a genuine reason assuming proof of Dapulas accusation existed for Meneses transfer or
even for her dismissal, if warranted. That the agency did not get into the bottom of Dapulas letter before it implemented
Meneses transfer is indicative of the sheer absence of an objective justification for the transfer. The most that the agency
did was to write Dapula a letter, through Yan, asking her to provide documents/evidence in support of her request for
Meneses transfer. Significantly, Yans request came after the labor arbiters summons to Yan regarding Meneses complaint.
Dapula never responded to Yans letter and neither did she provide the evidence needed for the agencys defense in the
complaint.

The Court cannot blame Menese for refusing Yans offer to be transferred. Not only was the transfer arbitrary and done in
bad faith, it would also result, as Menese feared, in a demotion in rank and a diminution in pay. Although Yan informed
Menese that based on the request of the client, she will be transferred to another assignment which however will not involve
any demotion in rank nor diminution in her salaries and other benefits, the offer was such as to invite reluctance and
suspicion as it was couched in a very general manner. We find credible Meneses submission on this point, i.e., that under
the offered transfer: (1) she would hold the position of lady guard and (2) she would be paid in accordance with the statutory
minimum wage, or from P11,720.00 to P7,500.00.

160-B Article 87 LC; Hours of Work; Overtime Pay; Premium Pay; Regular Wage
Cagampan vs. NLRC
195 SCRA 533, March 22, 1991
FACTS:

On April 17 and 18, 1985, petitioners, all seamen, entered into separate contracts of employment with the Golden Light
Ocean Transport, Ltd., through its local agency, private respondent ACE MARITIME AGENCIES, INC. Petitioners have
their respective ratings and monthly salary rates. Petitioners were deployed on May 7, 1985, and discharged on July 12,
1986. Thereafter, petitioners collectively and/or individually filed complaints for non-payment of overtime pay, vacation
pay and terminal pay against private respondent. In addition, they claimed that they were made to sign their contracts in
blank. Likewise, petitioners averred that although they agreed to render services on board the vessel Rio Colorado managed
by Golden Light Ocean Transport, Ltd., the vessel they actually boarded was MV SOIC I managed by Columbus
Navigation. Two (2) petitioners, Jorge de Castro and Juanito de Jesus, charged that although they were employed as ordinary
seamen (OS), they actually performed the work and duties of Able Seamen (AB).

Respondent was furnished with a copy of the complaints but failed to answer, thus, POEA rendered judgment in favor of
the petitioners granting their petition except for the terminal pay. Respondent appealed the above-stated decision to NLRC
which reversed the POEA's ruling.

Petitioners, receiving an unfavorable decision from NLRC, filed a motion for reconsideration, raising a technical error on
the part of the petitioners in not submitting an answer to the POEA, which, under the Rules of Court, is a waiver to present
evidence on the part of the respondents.

On the evidence to support for the grant of the overtime pay, the petitioners provided no proof, instead, they relied on the
fact that the guaranteed or fixed overtime pay of 30% of the basic salary per month embodied in their employment contract
should be awarded to them as part of a package benefit. They have theorized that even without sufficient evidence of
actual rendition of overtime work, they would automatically be entitled to overtime pay.

ISSUE: Whether or not the petitioners are entitled to overtime pay.

HELD:

No, the petitioners are NOT entitled to overtime pay.

Petitioners have conveniently adopted the view that the guaranteed or fixed overtime pay of 30% of the basic salary per
month embodied in their employment contract should be awarded to them as part of a package benefit. They have
theorized that even without sufficient evidence of actual rendition of overtime work, they would automatically be entitled
to overtime pay. They theory is erroneous for being illogical and unrealistic. Their thinking even runs counter to the intention
behind the provision. The contract provision means that the fixed overtime pay of 30% would be the basis for computing
the overtime pay if and when overtime work would be rendered. Simply, stated, the rendition of overtime work and the
submission of sufficient proof that said work was actually performed are conditions to be satisfied before a seaman could
be entitled to overtime pay which should be computed on the basis of 30% of the basic monthly salary. In short, the contract
provision guarantees the right to overtime pay but the entitlement to such benefit must first be established. Realistically
speaking, a seaman, by the very nature of his job, stays on board a ship or vessel beyond the regular eight-hour work
schedule. For the employer to give him overtime pay for the extra hours when he might be sleeping or attending to his
personal chores or even just lulling away his time would be extremely unfair and unreasonable.

We already resolved the question of overtime pay of a worker aboard a vessel in the case of National Shipyards and Steel
Corporation v. CIR (3 SCRA 890). We ruled: We can not agree with the Court below that respondent Malondras should
be paid overtime compensation for every hour in excess of the regular working hours that he was on board his vessel or
barge each day, irrespective of whether or not he actually put in work during those hours. Seamen are required to stay on
board their vessels by the very nature of their duties, and it is for this reason that, in addition to their regular compensation,
they are given free living quarters and subsistence allowances when required to be on board. It could not have been the
purpose of our law to require their employers to pay them overtime even when they are not actually working; otherwise,
every sailor on board a vessel would be entitled to overtime for sixteen hours each day, even if he spent all those hours
resting or sleeping in his bunk, after his regular tour of duty. The correct criterion in determining whether or not sailors are
entitled to overtime pay is not, therefore, whether they were on board and can not leave ship beyond the regular eight
working hours a day, but whether they actually rendered service in excess of said number of hours. (Italics supplied)

161 Article 87 LC; Hours of Work; Overtime Pay; Premium Pay; Regular Wage
Lagatic vs. National Labor Relations Commission
285 SCRA 251, January 28, 1998

FACTS:

Petitioner seeks, in this petition for certiorari under Rule 65, the reversal of the resolution of the National Labor Relations
Commission dated May 12, 1995, affirming the February 17, 1994, decision of Labor Arbiter Ricardo C. Nora finding that
petitioner had been validly dismissed by private respondent Cityland Development Corporation (hereafter referred to as
Cityland) and that petitioner was not entitled to separation pay, premium pay and overtime pay.

Petitioner Romeo Lagatic was employed in May 1986 by Cityland, first as a probationary sales agent, and later on as a
marketing specialist. He was tasked with soliciting sales for the company, with the corresponding duties of accepting callins,
referrals, and making client calls and cold calls. Cold calls refer to the practice of prospecting for clients through the
telephone directory.

Sales agent are required to submit daily report on the cold calls which the petitioner failed to do for a number of days. Thus,
a letter was given to him telling him to submit the daily report. Despite reminder, he continued to fail in submitting the daily
report. He was then suspended for three days for the continuous disobedience. Following the suspension, he still fails to
submit the said report. Moreover, petitioner made it worse for himself when he wrote the statement, TO HELL WITH
COLD CALLS! WHO CARES? A verbal reminder was given to him but, again, failed to comply.

On February 23, 1993, petitioner received a memorandum requiring him to explain why Cityland should not make good its
previous warning for his failure to submit cold call reports, as well as for issuing the written statement aforementioned. On
February 24, 1993, he sent a letter-reply alleging that his failure to submit cold call reports should not be deemed as gross
insubordination. He denied any knowledge of the damaging statement, TO HELL WITH COLD CALLS!
Finding petitioner guilty of gross insubordination, Cityland served a notice of dismissal upon him on February 26, 1993.
Aggrieved by such dismissal, petitioner filed a complaint against Cityland for illegal dismissal, illegal deduction,
underpayment, overtime and rest day pay, damages and attorneys fees. The labor arbiter dismissed the petition for lack of
merit. On appeal, the same was affirmed by the NLRC; hence the present recourse.

ISSUE: Whether or not the petitioner is entitled to overtime pay.

HELD:

No, the petitioner is NOT entitled to overtime pay.

With respect to petitioners claims for overtime pay, rest day pay and holiday premiums, Cityland maintains that Saturday
and Sunday call-ins were voluntary activities on the part of sales personnel who wanted to realize more sales and thereby
earn more commissions. It is their contention that sales personnel were clamoring for the privilege to attend Saturday and
Sunday call-ins, as well as to entertain walk-in clients at project sites during weekends, that Cityland had to stagger the
schedule of sales employees to give everyone a chance to do so. But simultaneously, Cityland claims that the same were
optional because call-ins and walk-ins were not scheduled every weekend. If there really were a clamor on the part of sales
staff to voluntarily work on weekends, so much so that Cityland needed to schedule them, how come no callins or walk-
ins were scheduled on some weekends?

In addition to the above, the labor arbiter and the NLRC sanctioned respondents practice of offsetting rest day or holiday
work with equivalent time on regular workdays on the ground that the same is authorized by Department Order 21, Series
of 1990. As correctly pointed out by petitioner, said D.O. was misapplied in this case. The D.O. involves the shortening of
the workweek from six days to five days but with prolonged hours on those five days. Under this scheme, non-payment of
overtime premiums was allowed in exchange for longer weekends for employees. In the instant case, petitioners workweek
was never compressed. Instead, he claims payment for work over and above his normal 5 1/2 days of work in a week.
Applying by analogy the principle that overtime cannot be offset by undertime, to allow off-setting would prejudice the
worker. He would be deprived of the additional pay for the rest day work he has rendered and which is utilized to offset his
equivalent time off on regular workdays. To allow Cityland to do so would be to circumvent the law on payment of
premiums for rest day and holiday work.

Notwithstanding the foregoing discussion, petitioner failed to show his entitlement to overtime and rest day pay due, to the
lack of sufficient evidence as to the number of days and hours when he rendered overtime and rest day work. Entitlement
to overtime pay must first be established by proof that said overtime work was actually performed, before an employee may
avail of said benefit. To support his allegations, petitioner submitted in evidence minutes of meetings wherein he was
assigned to work on weekends and holidays at Citylands housing projects. Suffice it to say that said minutes do not prove
that petitioner actually worked on said dates. It is a basic rule in evidence that each party must prove his affirmative
allegations. This petitioner failed to do.

162.

G.R. No. L-30279 July 30, 1982

PETITIONER PHILIPPINE NATIONAL BANK

RESPONDENTS PHILIPPINE NATIONAL BANK EMPLOYEES ASSOCIATION

AND COURT OF INDUSTRIAL RELATIONS

Facts:

PNB assails the decision of the Court of Industrial Relations made in pursuant to National Waterworks and Sewerage
Authority vs. NAWASA Consolidated Unions, et al. G.R. No. L-18938, Aug. 31, 1964 where it was held that the cost of
living allowance (COLA) and longevity pay be included in the regular wage as the amount that would serve as basis of
computing overtime pay.

Issue/s:

Whether or not COLA and longevity pay should be included in the computation of overtime pay?

Ruling:

No, COLA and longevity pay should not be included in the computation of overtime pay.

Ratio Decidendi:

COLA was granted by PNB upon realizing the difficult plight of its labor force in the face of the unusual inflationary
situation in the economy of the country, which, however acute, was nevertheless expected to improve whereas longevity
pay is given as a form of gratuity to its employees in consideration of their long-term service to the company. There was
thus a contingent character in these types of allowances. They were not intended to be regular, much less permanent
additional part of the compensation of employees and workers.

What are decisive in determining the basis for the computation of overtime pay are two very germane considerations,
namely, (1) whether or not the additional pay is for extra work done or service rendered and (2) whether or not the same is
intended to be permanent and regular, not contingent nor temporary and given only to remedy a situation which can change
any time. Overtime pay is for extra effort beyond that contemplated in the employment contract, hence when additional pay
is given for any other purpose, it is illogical to include the same in the basis for the computation of overtime pay.

163.

G.R. No. L-39387 June 29, 1982

PETITIONER PAMPANGA SUGAR DEVELOPMENT CO., INC.

RESPONDENTS COURT OF INDUSTRIAL RELATIONS AND SUGAR WORKERS

ASSOCIATION

Facts:

In 1956, members of the Sugar Workers Association (SWA) staged a strike against employer Pampanga Sugar Development
Co., Inc. (PSDC) and was consequently dismissed. However, said employees was reinstated through a court order. Upon
reinstatement, they were not granted the same benefits as those given to employees with membership in another labor union
prompting them to file CIR Case No. 4264- ULP for unfair labor practice.

The CIR, in the aforesaid case, ruled in favor of SWA. Hence, a motion for computation of final judgment and the petition
for attorney's lien was filed resulting to the following:

attorney's fees equivalent to 20% of the total amount of final judgment; and
directing its Examining Division to compute the wage and fringe benefits differentials due the 28 individual workers
who did not waive or quitclaim their rights as well as the attorney's fees equivalent to 20% of the total wage and
fringe benefits differentials due the fifty-three (53) individual workers who executed agreements with the company
waiving and quitclaiming their rights, benefits and privileges under the aforesaid decision
Motion for reconsideration filed by PSDC having been denied, the instant petition is made before the Supreme Court.

Issue/s:

Whether petition for attorney's lien containing allegations relative to attorney's fees is proper?

Ruling:

Yes, petition for attorney's lien containing allegations relative to attorney's fees is proper.

Ratio Decidendi:

The written conformity of the President of said Sugar Workers Association on behalf thereof confirms the existence of such
an agreement on attorney's fees and constitutes an irrefutable evidence of such agreement. The trial court, therefore, had
sufficient evidence upon which it based its decision.

Furthermore, the allegations of petitioner to the effect that by reason of the quitclaims there is nothing upon which the
attorney's lien attaches, is not valid. This Court finds the quitclaims not valid, for the following reasons:

a) Said quitclaims were secured on December 27, 1972 by PSDC after it lost its case in the lower court obviously to
frustrate the decision of the lower court awarding benefits to SWA member-employees.
b) The quitclaims are contrary to law for obligating the workers concerned to forego their benefits, while at the same time,
exempting PSDC from any liability;
c) The alleged quitclaim agreements are contrary to public policy. Once a civil action is filed in court, the cause of action
may not be the subject of compromise unless the same is by leave of the court concerned. Otherwise, this will render
the entire judicial system irrelevant to the prejudice of the national interest. Parties to litigations cannot be allowed to
trifle with the judicial system by coming to court and later on agreeing to a compromise without the knowledge and
approval of the court.

164.

G.R. No. L-30452 September 30, 1982

PETITIONER MERCURY DRUG CO., INC.

RESPONDENTS NARDO DAYAO, ET AL.

Facts:

Dayao, et al. (69 other employees) had filed a petition against Mercury Drug praying:

1) payment of their unpaid back wages for work done on Sundays and legal holidays plus 25% additional compensation
from date of their employment up to June 30, 1962;

2) payment of extra compensation on work done at night;

3) reinstatement of Januario Referente and Oscar Echalar to their former positions with back salaries; and, as against
the respondent union, for its disestablishment and the refund of all monies it had collected from petitioners.

to which the CIR had rendered the following decision:

1. The claim of the petitioners for payment of back wages corresponding to the first four hours work rendered on every
other Sunday and first four hours on legal holidays should be denied for lack of merit;

2. Respondent Mercury Drug is hereby ordered to pay the sixty-nine (69) petitioners:
 a) An additional sum equivalent to 25% of their respective basic or regular salaries for services rendered on
Sundays and legal holidays during the period from March 20, 1961 up to June 30, 1962; and
b) Another additional sum or premium equivalent to 25% of their respective basic or regular salaries for nighttime
services rendered from March 20, 1961 up to June 30, 1962; and

3. Petitioners petition to convert them to monthly employees should be, as it is hereby, denied for lack of merit.

Only Mercury Drug filed a motion for reconsideration which was subsequently denied. Hence, Mercury Drugs instant
recourse.

Issue/s:

Whether Dayao, et al. are entitled to the 25% Sunday and Legal Holiday premiums?

Ruling:

Yes, Dayao, et al. are entitled to the 25% Sunday and Legal Holiday premiums.

Ratio Decidendi:

While an employer may compel his employees to perform service on such days, the law nevertheless imposes upon him the
obligation to pay his employees at least 25% additional of their basic or regular salaries. Under Section 4 of C. A. No. 444,
no person, firm or corporation, business establishment or place of center of labor shall compel an employee or laborer to
work during Sundays and legal holidays unless he is paid an additional sum of at least twenty-five per centum of his regular
remuneration. Respondent-employees are within the coverage of the above-cited provision for they do not fall within the
category or class of employees or laborers excluded from its provisions.

165.
GR No. L-1309 July 26, 1948
PETITIONER SHELL COMPANY OF THE PHILIPPINE ISLANDS, LIMITED
RESPONDENTS NATIONAL LABOR UNION

Facts:

The CIR ordered Shell to pay their employees who work at night an additional compensation of 50% of their regular
wages if they ordinarily worked during the day. Shell disagreed contending that there is no legal provision giving the CIR
authority to order the payment of additional compensation to employees who work at night. According to Shell,
Commonwealth Act No. 444 only provides payment of "overtime" and not night differentials.

Issue/s:

Does the CIR have the power to order payment of night differentials?

Ruling:

Yes, the CIR has the power to order payment of night differentials.

Ratio Decidendi:

The Court ruled that this power is included in the general powers of the CIR. If the CIR has, in cases of dispute, the power
to set wages as it deems fair and reasonable for the work day, there is no reason it should not have the same power with
respect to the wages of night. Regarding the appreciation that night work is heavier and cumbersome than the day and
therefore deserves greater remuneration, there is no reason to revoke or alter. There is no possible argument against the
universal fact that regular, normal, ordinary work is to day, and night work is exceptional and justified only by certain
unavoidable reasons imperatively.

Doctrine:

[Escra in Spanish text. ]

166.
G.R. No. 119205 April 15, 1998
PETITIONER SIME DARBY PILIPINAS, INC.
RESPONDENTS NATIONAL LABOR RELATIONS COMMISSION (2ND DIVISION)
and SIME DARBY SALARIED EMPLOYEES ASSOCIATION (ALU-
TUCP)

Facts:

SIME issued a memorandum to all factory-based employees re change in work schedule from 7:45 A.M. 3:45 P.M. to
7:45 A.M. 4:45 P.M. Previously, its employees were entitled to a 30 minute paid on call lunch break but the change
in work schedule discontinued this practice. Instead, the employees can now enjoy a one-hour lunch break without
interruption.

Since the union felt affected adversely by the change in the work schedule and discontinuance of the 30-minute paid "on
call" lunch break, it filed on behalf of its members a complaint with the Labor Arbiter for unfair labor practice. However,
the Labor Arbiter dismissed the complaint on the ground that the change in the work schedule and the elimination of the
30-minute paid lunch break of the factory workers constituted a valid exercise of management prerogative and that the
new work schedule, break time and one-hour lunch break did not have the effect of diminishing the benefits granted to
factory workers as the working time did not exceed eight (8) hours.

The Union appealed to the NLRC but such appeal was denied. However, upon motion for reconsideration by private
respondent, the NLRC, this time with two (2) new commissioners replacing those who earlier retired, reversed its earlier
decision

Hence, the instant petition.

Issue/s:

Whether the change of work schedule constitutes unfair labor practice?

Ruling:

No, the change of work schedule does not constitute unfair labor practice

Ratio Decidendi:

Every business enterprise endeavors to increase its profits. In the process, it may devise means to attain that goal. Even as
the law is solicitous of the welfare of the employees, it must also protect the right of an employer to exercise what are
clearly management prerogatives. Thus, management is free to regulate, according to its own discretion and judgment, all
aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, processes
to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay off of workers
and discipline, dismissal and recall of workers. Further, management retains the prerogative, whenever exigencies of the
service so require, to change the working hours of its employees. So long as such prerogative is exercised in good faith for
the advancement of the employer's interest and not for the purpose of defeating or circumventing the rights of the
employees under special laws or under valid agreements, this Court will uphold such exercise.
167.
G.R. No. L-16275 February 23, 1961

PETITIONER PAN AMERICAN WORLD AIRWAYS SYSTEM

RESPONDENTS PAN AMERICAN EMPLOYEES ASSOCIATION

Facts:

The case filed by Pan American employees before the CIR was granted and consisted of the following:

Grant of overtime pay for the one-hour lunch break during which the CIR found that the employees were on call
Order to adopt a straight 8-hour shift inclusive of meal period

In this appeal, petitioner advances five propositions which, briefly, are as follows: (1) the Industrial Court has no jurisdiction
to order the payment of overtime compensation, it being a mere monetary claim cognizable by regular courts; (2) the finding
that the one-hour meal period should be considered overtime work (deducting 15 minutes as time allotted for eating) is not
supported by substantial evidence; (3) the court below had no authority to delegate its judicial functions by ordering the
Chief of the Examining Division or his representative to compute the overtime pay; (4) the finding that there was no
agreement to withdraw Case No. 1055-V in consideration of the wage increases in the Collective Bargaining Contract (Exh.
"A") is not supported by substantial evidence; and (5) the court below had no authority to order the company to adopt a
straight 8-hour shift inclusive of meal period.

Issue/s:

1. Whether the CIR has jurisdiction to order the payment of overtime compensation, it being a mere monetary claim
cognizable by regular courts?
2. Whether the finding that the one-hour meal period should be considered overtime work?
3. Whether the CIR has authority to delegate its judicial functions by ordering the Chief of the Examining Division or his
representative to compute the overtime pay?
4. Whether the CIR has authority to order the company to adopt a straight 8-hour shift inclusive of meal period?

Ruling:

1. Yes, the CIR has jurisdiction to order the payment of overtime compensation.
2. Yes, the one-hour meal period should be considered overtime work.
3. Yes, the CIR has authority to delegate its judicial functions by ordering the Chief of the Examining Division or his
representative to compute the overtime pay.
4. Yes, the CIR has authority to order the company to adopt a straight 8-hour shift inclusive of meal period.
Ratio Decidendi:

1. The CIR may take cognizance of such cases if, at the time of the petition, the complainants were still in the service of
the employer, or, having been separated from such service, should ask for reinstatement; otherwise, such claims should
be brought before the regular courts.

In the instant case there is no question that the employees claiming overtime compensation were still in the service of
the company when the case was filed. Hence, the CIR has jurisdiction.

2. During the so-called meal period, the mechanics were required to stand by for emergency work; that if they happened
not to be available when called, they were reprimanded by the leadman; that as in fact it happened on many occasions,
the mechanics had been called from their meals or told to hurry up eating to perform work during this period. Far from
being unsupported by substantial evidence, the record clearly confirms the above factual findings of the CIR.

3. Computation of the overtime pay involves a mechanical function, at most. And the report would still have to be
submitted to the Industrial Court for its approval, by the very terms of the order itself. No undue delegation took place.
4. The Industrial Court's order for permanent adoption of a straight 8-hour shift including the meal period was but a
consequence of its finding that the meal hour was not one of complete rest, but was actually a work hour, since for its
duration, the laborers had to be on ready call. Of course, if the Company practices in this regard should be modified to
afford the mechanics a real rest during that hour (f. ex., by installing an entirely different emergency crew, or any similar
arrangement), then the modification of this part of the decision may be sought from the Court below. As things now
stand, we see no warrant for altering the decision.

168.
G.R. No. L-15422 November 30, 1962

PETITIONER NATIONAL DEVELOPMENT COMPANY

RESPONDENTS COURT OF INDUSTRIAL RELATIONS and NATIONAL TEXTILE

WORKERS UNION

Facts:

The National Development Company (NDC), a government-owned and controlled corporation, has four work shifts. In each
shift, there was a one-hour mealtime period which NDC credited as worked hour. However, since 1953, whenever workers
in one shift were required to continue working until the next shift, NDC instead of crediting them with eight hours of
overtime work, has been paying them for six hours only. NDC now asserts that the two hours corresponding to the mealtime
periods should not be included in computing compensation.

The CIR held that the one-hour mealtime should be counted in the determination of overtime work and accordingly ordered
NDC to pay P101,407.96 by way of overtime compensation. NDC filed a motion for reconsideration but the same was
dismissed by the CIR en banc.

Hence, the instant petition.

Issue/s:

1. Whether the CIR has jurisdiction?

2. Whether subject mealtime breaks should be considered working time?

Ruling:

1. Yes, the CIR has jurisdiction.

2. Yes, subject mealtime breaks should be considered working time.

Ratio Decidendi:

1. The CIR has jurisdiction where the employer-employee relationship is still existing or is sought to be reestablished
because of its wrongful severance, (as where the employee seeks reinstatement). After the termination of their
relationship and no reinstatement is sought, such claims become mere money claims, and come within the jurisdiction
of the regular courts.

In the present case, petitioner does not deny the existence of an employer-employee relationship between it and the
members of the union. Neither is there any question that the claim is based on the Eight-Hour Labor Law (Com. Act
No. 444. as amended). We therefore rule in favor of the jurisdiction of the CIR over the present claim.

2. Sec. 1, Com. Act No. 444 provides:

 The legal working day for any person employed by another shall be of not more than eight hours daily. When the work
is not continuous, the time during which the laborer is not working and can leave his working place and can rest
completely shall not be counted.

In this case, the CIR found that work in NDC was continuous and did not permit employees and laborers to rest
completely. The time cards show that the work was continuous and without interruption. There is also the evidence
adduced by the petitioner that the pertinent employees cannot freely leave their working places nor rest completely.

Hence, the CIR correctly concluded that work in petitioner company was continuous and therefore the mealtime breaks
should be counted as working time for purposes of overtime compensation.

Doctrine:

Court of Industrial Relations; Jurisdiction; Requisites.In order that the Court of Industrial Relations will have jurisdiction
over a case, the following requisites must be complied with: (a) there must exist between the parties an employer-employee
relationship or the claimant must seek his reinstate ment; and (b) the controversy must relate to a case certified by the
President to the Court of Industrial Relations as one involving national interest, or must have a bearing on an unfair labor
practice charge, or must arise either under the Eight-Hour Labor Law, or under the Minimum Wage Law. In default of any
of these circumstances, the claim becomes a mere money claim that comes under the jurisdiction of the regular courts.
(Campos, et al. vs. Manila Railroad Co., et al., L-17905, May 25, 1962.)

Same; Motion for Reconsideration; Service on adverse party required.A motion for reconsideration, a copy of which has
not been served on the adverse party as required by the rules, stands on the same footing as one filed outside of the period
required by the rules of the Court of Industrial Relations. Hence, after its dismissal for failure to make such service, there is
no decision of the Court en banc that petitioner can bring to the Supreme Court for review.

Labor; Compensable Work; When idle time is not counted as working time.The idle time that an employee may spend
for resting and during which he may leave the spot or place of work though not the premises of his employer, is not counted
as working time only where the work is broken or is not continuous.

Same; Same; Question of what is compensable work one of fact.The question of what constitutes compensable work is
one of fact the determination of which depends upon the particular circumstances, to be determined by the courts in
controverted cases.

169. JPL MARKETING PROMOTIONS vs. COURT OF APPEALS, NATIONAL LABOR RELATIONS
COMMISSION, NOEL GONZALES, RAMON ABESA III and FAUSTINO ANINIPOT

Facts of the case:

JPL Marketing and Promotions (JPL) is a domestic corporation engaged in the business of recruitment and placement of
workers. Private respondents Noel Gonzales, Ramon Abesa III and Faustino Aninipot were employed by JPL as
merchandisers and assigned at different establishments as attendants to the display of California Marketing Corporation
(CMC), one of JPLs clients.
JPL notified private respondents that CMC would stop its direct merchandising activity 2 days upon notification. They were
advised to wait for further notice as they would be transferred to other clients. However, private respondents The
respondents filed before the National Labor Relations Commission Regional Arbitration Branch (NLRC) Sub V complaints
for illegal dismissal, praying for separation pay, 13th month pay, service incentive leave pay and payment for moral
damages.
Executive Labor Arbiter dismissed the complaints for lack of merit. The Labor Arbiter found that Gonzales and Abesa
applied with and were employed by the store where they were originally assigned by JPL even before the lapse of the six-
month period given by law to JPL to provide private respondents a new assignment. Thus, they may be considered to have
unilaterally severed their relation with JPL, and cannot charge JPL with illegal dismissal. The Labor Arbiter held that it
was incumbent upon private respondents to wait until they were reassigned by JPL, and if after six months they were not
reassigned, they can file an action for separation pay but not for illegal dismissal. The claims for 13th month pay and service
incentive leave pay was also denied since private respondents were paid way above the applicable minimum wage during
their employment.
Private respondents appealed to the NLRC. In its Resolution, NLRC agreed with the Labor Arbiter's finding that when
private respondents filed their complaints, the six-month period had not yet expired, and that CMC's decision to stop its
operations in the areas was beyond the control of JPL, thus, they were not illegally dismissed. However, it found that despite
JPL's effort to look for clients to which private respondents may be reassigned it was unable to do so, and hence they are
entitled to separation pay. Setting aside the Labor Arbiter's decision, the NLRC ordered the payment of:
1. Separation pay, based on their last salary rate and counted from the first day of their employment with
the respondent JPL up to the finality of this judgment;
2. Service Incentive Leave pay, and 13th month pay, computed as in No. 1 hereof.
Aggrieved, JPL filed a petition for certiorari under Rule 65 of the Rules of Court with the Court of Appeals, but the latter
dismissed the petition and affirmed in toto the NLRC resolution. While conceding that there was no illegal dismissal, it
justified the award of separation pay on the grounds of equity and social justice. The Court of Appeals rejected JPL's
argument that the difference in the amounts of private respondents' salaries and the minimum wage in the region should be
considered as payment for their service incentive leave and 13th month pay. Notwithstanding the absence of a contractual
agreement on the grant of 13th month pay, compliance with the same is mandatory under the law. Moreover, JPL failed to
show that it was exempt from paying service incentive leave pay. JPL filed a motion for reconsideration of the said
resolution, but the same was denied.

Issue:

Whether or not JPL should be compelled to pay the respondents with separation pay, Service Incentive Leave pay, and 13th
month pay.

Ruling:

The common denominator of the instances where payment of separation pay is warranted is that the employee was dismissed
by the employer. In the instant case, there was no dismissal to speak of. Private respondents were simply not dismissed at
all, whether legally or illegally. What they received from JPL was not a notice of termination of employment, but a memo
informing them of the termination of CMC's contract with JPL. More importantly, they were advised that they were to be
reassigned. At that time, there was no severance of employment to speak of.

On the other hand, service incentive leave, as provided in Art. 95 of the Labor Code, is a yearly leave benefit of five (5)
days with pay, enjoyed by an employee who has rendered at least one year of service.
Admittedly, private respondents were not given their 13th month pay and service incentive leave pay while they were under
the employ of JPL. Instead, JPL provided salaries which were over and above the minimum wage. The Court rules that the
difference between the minimum wage and the actual salary received by private respondents cannot be deemed as their 13th
month pay and service incentive leave pay as such difference is not equivalent to or of the same import as the said benefits
contemplated by law. Thus, as properly held by the Court of Appeals and by the NLRC, private respondents are entitled to
the 13th month pay and service incentive leave pay.
However, the Court disagrees with the Court of Appeals' ruling that the 13th month pay and service incentive leave pay
should be computed from the start of employment up to the finality of the NLRC resolution. While computation for the 13th
month pay should properly begin from the first day of employment, the service incentive leave pay should start a year after
commencement of service, for it is only then that the employee is entitled to said benefit. On the other hand, the computation
for both benefits should only be up to the last day that private respondents worked for JPL. To extend the period to the date
of finality of the NLRC resolution would negate the absence of illegal dismissal, or to be more precise, the want of dismissal
in this case.
WHEREFORE, the petition is GRANTED IN PART. The Decision and Resolution of the Court of Appeals are MODIFIED.
The award of separation pay is deleted. Petitioner is ordered to pay private respondents their 13th month pay, as well as
service incentive leave pay from the second year of employment.
 PRODUCERS BANK OF THE PHILIPPINES vs. NATIONAL LABOR RELATIONS COMMISSION and
PRODUCERS BANK EMPLOYEES ASSOCIATION

Facts of the case:

The case originated from a complaint filed by private respondent with the Arbitration Branch, National Labor Relations
Commission (NLRC), charging petitioner with diminution of benefits, non-compliance with Wage Order No. 6 and non-
payment of holiday pay; and praying for damages.

Labor Arbiter found private respondent's claims to be unmeritorious and dismissed its complaint. In a complete reversal,
however, the NLRC granted all of private respondent's claims, except for damages. Petition filed a Motion for Partial
Reconsideration, which was denied by the NLRC; hence, recourse to the Supreme Court.
The Labor Arbiter found that the divisor used by petitioner in arriving at the employees' daily rate for the purpose of
computing salary-related benefits is 314. This finding was not disputed by the NLRC. However, the divisor was reduced to
303 by virtue of an inter-office memorandum issued on 13 August 1986, to wit
To increase the rate of overtime pay for rank and filers, we are pleased to inform that effective August
18, 1986, the acting Conservator approved the use of 303 days as divisor in the computation of Overtime
pay. The present Policy of 314 days as divisor used in the computation for cash conversion and
determination of daily rate, among others, still remain, Saturdays, therefore, are still considered paid rest
days.
Private respondent admits that, prior to 18 August 1986, petitioner used a divisor of 314 in arriving at the daily wage rate
of monthly-salaried employees. Private respondent also concedes that the divisor was changed to 303 for purposes of
computing overtime pay only. In its Memorandum, private respondent states that
49. The facts germane to this issue are not debatable. The Memorandum Circular issued by the Acting
Conservator is clear. Prior to August 18, 1986, the petitioner bank used a divisor of 314 days in arriving
at the daily wage rate of the monthly-salaried employees. Effective August 18, 1986, this was changed.
It adopted the following formula:
(Basic salary x 12 months)
= Daily Wage Rate
303 days
50. By utilizing this formula even up to the present, the conclusion is inescapable that the petitioner bank
is not actually paying its employees the regular holiday pay mandated by law. Consequently, it is bound
to pay the salary differential of its employees effective November 1, 1974 up to the present.
xxx xxx xxx
54. Since it is a question of fact, the Inter-office Memorandum dated August 13, 1986 (Annex "E")
provides for a divisor of 303 days in computing overtime pay. The clear import of this document is that
from the 365 days in a year, we deduct 52 rest days which gives a total of 313 days. Now, if 313 days is
the number of working days of the employees then, there is a disputable presumption that the employees
are paid their holiday pay. However, this is not so in the case at bar. The bank uses 303 days as its divisor.
Hence, it is not paying its employees their corresponding holiday pay.

Issue:
Whether or not the petitioner is not paying its employees their corresponding holiday pay.

Ruling:

Resolution issued by the NLRC in the same case are set aside, with the exception of ruling on damages.
Article 94 of the Labor Code provides that every worker shall be paid his regular daily wage during regular holidays and
that the employer may require an employee to work on any holiday but such employee shall be paid a compensation
equivalent to twice his regular rate. In this case, the Labor Arbiter found that the divisor used by petitioner in arriving at the
employees' daily rate for the purpose of computing salary-related benefits is 314. This finding was not disputed by the
NLRC. However, the divisor was reduced to 303 by virtue of an inter-office memorandum.
Proceeding from the unambiguous terms of the memorandum, the Labor Arbiter observed that the reduction of the divisor
to 303 was for the sole purpose of increasing the employees' overtime pay and was not meant to replace the use of 314 as
the divisor in the computation of the daily rate for salary-related benefits.
In Union of Filipino Employees v. Vivar, Jr. the Court held that "[t]he divisor assumes an important role in determining
whether or not holiday pay is already included in the monthly paid employee's salary and in the computation of his daily
rate." This was also our ruling in Chartered Bank Employees Association v. Ople, as follows
It is argued that even without the presumption found in the rules and in the policy instruction, the company
practice indicates that the monthly salaries of the employees are so computed as to include the holiday
pay provided by law. The petitioner contends otherwise.
One strong argument in favor of the petitioner's stand is the fact that the Chartered Bank, in computing
overtime compensation for its employees, employs a "divisor" of 251 days. The 251 working days divisor
is the result of subtracting all Saturdays, Sundays and the ten (10) legal holidays from the total number
of calendar days in a year. If the employees are already paid for all non-working days, the divisor should
be 365 and not 251.
Apparently, the divisor of 314 is arrived at by subtracting all Sundays from the total number of calendar days in a year,
since Saturdays are considered paid rest days, as stated in the inter-office memorandum. Thus, the use of 314 as a divisor
leads to the inevitable conclusion that the ten legal holidays are already included therein.
We agree with the labor arbiter that the reduction of the divisor to 303 was done for the sole purpose of increasing the
employees' overtime pay, and was not meant to exclude holiday pay from the monthly salary of petitioner's employees. In
fact, it was expressly stated in the inter-office memorandum also referred to by private respondent in its pleadings
that the divisor of 314 will still be used in the computation for cash conversion and in the determination of the daily rate.
Thus, based on the records of this case and the parties' own admissions, the Court holds that petitioner has complied with
the requirements of Article 94 of the Labor Code.
ASIAN TRANSMISSION CORPORATION vs. The Hon. COURT OF APPEALS, Thirteenth Division, HON.
FROILAN M. BACUNGAN as Voluntary Arbitrator, KISHIN A. LALWANI, Union, Union representative to the
Panel Arbitrators; BISIG NG ASIAN TRANSMISSION LABOR UNION (BATLU); HON. BIENVENIDO T.
LAGUESMA in his capacity as Secretary of Labor and Employment; and DIRECTOR CHITA G. CILINDRO in
her capacity as Director of Bureau of Working Conditions

Facts of the case:

The Department of Labor and Employment (DOLE) issued an Explanatory Bulletin dated March 11, 1993 wherein it
clarified, inter alia, that employees are entitled to 200% of their basic wage on April 9, 1993, whether unworked, which[,]
apart from being Good Friday [and, therefore, a legal holiday], is also Araw ng Kagitingan [which is also a legal holiday].

Said bulletin was reproduced on January 23, 1998, when April 9, 1998 was both Maundy Thursday and Araw ng Kagitingan.

Despite the explanatory bulletin, petitioner [Asian Transmission Corporation] opted to pay its daily paid employees only
100% of their basic pay on April 9, 1998. Respondent Bisig ng Asian Transmission Labor Union (BATLU) protested.

In accordance with Step 6 of the grievance procedure of the Collective Bargaining Agreement (CBA) existing between
petitioner and BATLU, the controversy was submitted for voluntary arbitration. The Office of the Voluntary Arbitrator
rendered a decision directing petitioner to pay its covered employees "200% and not just 100% of their regular daily wages
for the unworked April 9, 1998 which covers two regular holidays, namely, Araw ng Kagitingan and Maundy Thursday.

Issue:

Whether or not the petitioners should be required to pay 200% of its employees basic pay on April 9, 1998, which was both
Maundy Thursday and Araw ng Kagitingan, legal holidays.

Ruling:

Subject of interpretation in the case at bar is Article 94 of the Labor Code which reads:

ART. 94. Right to holiday pay. (a) Every worker shall be paid his regular daily wage during regular
holidays, except in retail and service establishments regularly employing less than ten (10) workers;
(b) The employer may require an employee to work on any holiday but such employee shall be paid a
compensation equivalent to twice his regular rate; and
(c) As used in this Article, "holiday" includes: New Year's Day, Maundy Thursday, Good Friday, the
ninth of April, the first of May, the twelfth of June, the fourth of July, the thirtieth of November, the
twenty-fifth and thirtieth of December and the day designated by law for holding a general election, which
was amended by Executive Order No. 203 issued on June 30, 1987, such that the regular holidays are
now:

1. New Year's Day January 1

2. Maundy Thursday Movable Date
3. Good Friday Movable Date
4. Araw ng Kagitingan April 9
(Bataan and Corregidor Day)
5. Labor Day May 1
6. Independence Day June 12
7. National Heroes Day Last Sunday
of August
8. Bonifacio Day November 30
9. Christmas Day December 25
10. Rizal Day December 30
As reflected above, Art. 94 of the Labor Code, as amended, affords a worker the enjoyment of ten paid regular holidays.
The provision is mandatory, regardless of whether an employee is paid on a monthly or daily basis. Unlike a bonus, which
is a management prerogative, holiday pay is a statutory benefit demandable under the law. Since a worker is entitled to the
enjoyment of ten paid regular holidays, the fact that two holidays fall on the same date should not operate to reduce to nine
the ten holiday pay benefits a worker is entitled to receive.

Moreover, Sec. 11, Rule IV, Book III of the Omnibus Rules to Implement the Labor Code provides that "Nothing in the law
or the rules shall justify an employer in withdrawing or reducing any benefits, supplements or payments for unworked
regular holidays as provided in existing individual or collective agreement or employer practice or policy.
From the pertinent provisions of the CBA entered into by the parties, petitioner had obligated itself to pay for the legal
holidays as required by law.
 SAN MIGUEL CORPORATION vs. THE HONORABLE COURT OF APPEALS-FORMER THIRTEENTH
DIVISION, HON. UNDERSECRETARY JOSE M. ESPAOL, JR., Hon. CRESENCIANO B. TRAJANO, and
HON. REGIONAL DIRECTOR ALLAN M. MACARAYA

Facts of the case:

The Department of Labor and Employment (DOLE) conducted a routine inspection in the premises of San Miguel
Corporation (SMC) in one of its branches and the former discovered that there was underpayment by SMC of regular
Muslim holiday pay to its employees. For failure of SMC to submit proof that it was paying regular Muslim holiday pay to
its employees, Director Macaraya of the DOLE Iligan District issued a compliance order directing SMC to consider Muslim
holidays as regular holidays and to pay both its Muslim and non-Muslim employees holiday pay within thirty (30) days
from receipt of the order. SMC appealed to the DOLE main office, but its appeal was dismissed for having been filed late.
The dismissal of the appeal was later on reconsidered after it was found that the appeal was filed within the reglementary
period. However, the appeal was still dismissed for lack of merit and the order of Director Macaraya was affirmed. SMC
went to the Supreme Court for relief via a petition for certiorari, which this Court referred to the Court of Appeals. The
Court of Appeals modified the Orders with regard to the payment of Muslim holiday pay from 200% to 150% of the
employee's basic salary. Its motion for reconsideration having been denied for lack of merit, SMC filed a petition
for certiorari before the Supreme Court.

Issue:

Whether or not petitioner SMC should be required the regular Muslim holiday pay given to its employees.

Ruling:

The Supreme Court found no reason to reverse the decision of the Court of Appeals. Muslim holidays are provided under
the Code of Muslim Personal Laws and should be read in conjunction with Article 94 of the Labor Code. There should be
no distinction between Muslims and non-Muslims as regards payment of benefits for Muslim holidays. Wages and other
emoluments granted by law to the working man are determined on the basis of the criteria laid down by laws and certainly
not on the basis of the worker's faith or religion.
 UNION OF FILIPRO EMPLOYEES (UFE) vs. BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS
COMMISSION and NESTLE PHILIPPINES, INC. (formerly FILIPRO, INC.)

Facts of the case:

Respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National Labor Relations Commission (NLRC) a
petition for declaratory relief seeking a ruling on its rights and obligations respecting claims of its monthly paid employees
for holiday pay.

Both Filipro and the Union of Filipro Employees (UFE) agreed to submit the case for voluntary arbitration.

The Arbitrator rendered a decision directing Filipro to:

"pay its monthly paid employees holiday pay pursuant to Article 94 of the Code, subject only to the
exclusions and limitations specified in Article 82 and such other legal restrictions as are provided for in
the Code."

Filipro filed a motion for clarification seeking (1) the limitation of the award to three years, (2) the exclusion of salesmen,
sales representatives, truck drivers, merchandisers and medical representatives (hereinafter referred to as sales
personnel) from the award of the holiday pay; and (3) deduction from the holiday pay award of overpayment for overtime,
night differential, vacation and sick leave benefits due to the use of 251 divisor.

Petitioner UFE answered that the award should be made effective from the date of effectivity of the Labor Code, that their
sales personnel are not field personnel and are therefore entitled to holiday pay, and that the use of 251 as divisor is an
established employee benefit which cannot be diminished.

Issue:

Whether or not Nestle's sales personnel are entitled to holiday pay.

Ruling:

Under Article 82, field personnel are not entitled to holiday pay. Said article defines field personnel as "non-agricultural
employees who regularly perform their duties away from the principal place of business or branch office of the employer
and whose actual hours of work in the field cannot be determined with reasonable certainty."

The controversy centers on the interpretation of the clause "whose actual hours of work in the field cannot be determined
with reasonable certainty.

Moreover, the requirement that "actual hours of work in the field cannot be determined with reasonable certainty" must be
read in conjunction with Rule IV, Book III of the Implementing Rules which provides:

"Rule IV Holidays with Pay.

SECTION 1. Coverage. This rule shall apply to all employees except:
xxx xxx xxx
(e) Field personnel and other employees whose time and performance is unsupervised by the employer.
 JOSE RIZAL COLLEGE vs. NATIONAL LABOR RELATIONS COMMISSION and NATIONAL ALLIANCE
OF TEACHERS/OFFICE WORKERS

Facts of the case:

Jose Rizal College (JCR) is a non-stock, non-profit educational institution duly organized and existing under the laws of the
Philippines. It has three groups of employees categorized as follows: (a) personnel on monthly basis, who receive their
monthly salary uniformly throughout the year, irrespective of the actual number of working days in a month without
deduction for holidays; (b) personnel on daily basis who are paid on actual days worked and they receive unworked holiday
pay and (c) collegiate faculty who are paid on the basis of student contract hour. Before the start of the semester they sign
contracts with the college undertaking to meet their classes as per schedule.

Unable to receive their corresponding holiday pay, private respondent National Alliance of Teachers and Office Workers
(NATOW) in behalf of the faculty and personnel of Jose Rizal College filed a complaint against the college for said
alleged non-payment of holiday pay.

The Labor Arbiter rendered a decision stating that the faculty and personnel of JCR who are paid their salary by the month
are presumed to be already paid the 10 paid legal holidays and are no longer entitled to separate payment for the said regular
holidays, while the personnel who are paid their wages daily are entitled to be paid the 10 unworked regular holidays , and
Collegiate faculty who by contract are paid compensation per student contract hour are not entitled to unworked regular
holiday pay considering that these regular holidays have been excluded in the programming of the student contact hours.

On appeal, respondent NLRC modified the decision appealed from, in the sense that teaching personnel paid by the hour
are declared to be entitled to holiday pay.

Hence, this petition.

Issue:

Whether or not the school faculty who according to their contracts are paid per lecture hour are entitled to unworked
holiday pay.

Ruling:

Under Article 94 of the Labor Code (P.D. No. 442 as amended), holiday pay applies to all employees except those in retail
and service establishments. To deprive therefore employees paid at an hourly rate of unworked holiday pay is contrary to
the policy considerations underlying such presidential enactment, and its precursor, the Blue Sunday Law (Republic Act
No. 946) apart from the constitutional mandate to grant greater rights to labor (Constitution, Article II, Section 9)..

In addition, respondent National Labor Relations Commission ruled that the purpose of a holiday pay is obvious; that is to
prevent diminution of the monthly income of the workers on account of work interruptions. In other words, although the
worker is forced to take a rest, he earns what he should earn. That is his holiday pay. It is no excuse therefore that the school
calendar is extended whenever holidays occur, because such happens only in cases of special holidays.

Subject holiday pay is provided for in the Labor Code (Presidential Decree No. 442, as amended), which reads:
"Art. 94. Right to holiday pay (a) Every worker shall be paid his regular daily wage during regular
holidays, except in retail and service establishments regularly employing less than ten (10) workers;
(b) The employer may require an employee to work on any holiday but such employee shall be paid a
compensation equivalent to twice his regular rate; . . ."

and in the Implementing Rules and Regulations, Rule IV, Book III, which reads:
"SEC. 8. Holiday pay of certain employees. (a) Private school teachers, including faculty members of
colleges and universities, may not be paid for the regular holidays during semestral vacations. They shall,
however, be paid for the regular holidays during Christmas vacations. . . .

Under the foregoing provisions, apparently, the petitioner, although a non-profit institution is under obligation to give pay
even on unworked regular holidays to hourly paid faculty members subject to the terms and conditions provided for therein.

The decision of respondent National Labor Relations Commission is set aside, and a new one is RENDERED:

(a) exempting petitioner from paying hourly paid faculty members their pay for regular holidays, whether
the same be during the regular semesters of the school year or during semestral, Christmas, or Holy Week
vacations;

(b) but ordering petitioner to pay said faculty members their regular hourly rate on days declared as
special holidays or for some reason classes are called off or shortened for the hours they are supposed to
have taught, whether extensions of class days be ordered or not; in case of extensions said faculty
members shall likewise be paid their hourly rates should they teach during said extensions.
 THE CHARTERED BANK EMPLOYEES ASSOCIATION vs. HON. BLAS F. OPLE, in his capacity as the
Incumbent Secretary of Labor, and THE CHARTERED BANK

Facts of the case:

The Chartered Bank Employees Association, in representation of its monthly paid employees/members, instituted a
complaint with the Department of Labor, now Ministry of Labor and Employment (MOLE) against Chartered Bank, for the
payment of ten unworked legal holidays, as well as for premium and overtime differentials for worked legal holidays from
November 1, 1974.

The Minister of Labor dismissed the Chartered Bank Employees Associations claim for lack of merit basing its decision
on Section 2,Rule IV, Book Ill of the Integrated Rules and Policy Instruction No. 9, which respectively provide: Sec. 2.
Status of employees paid by the month.

Employees who are uniformly paid by the month, irrespective of the number of working days therein, with a salary of not
less than the statutory or established minimum wage shall be presumed to be paid for all days in the month whether worked
or not.

POLICY INSTRUCTION NO. 9.

TO: All Regional Directors
SUBJECT: PAID LEGAL HOLIDAYS
"The rules implementing PD 850 have clarified the policy in the implementation of the ten (10) paid legal
holidays. Before PD 850, the number of working days a year in a firm was considered important in
determining entitlement to the benefit. Thus, where an employee was working for at least 313 days, he
was considered definitely already paid. If he was working for less than 313, there was no certainty
whether the ten (10) paid legal holidays were already paid to him or not.
"The ten (10) paid legal holidays law, to start with, is intended to benefit principally daily employees. In
the case of monthly, only those whose monthly salary did not yet include payment for the ten (10) paid
legal holidays are entitled to the benefit.
"Under the rules implementing PD 850, this policy has been fully clarified to eliminate controversies on
the entitlement of monthly paid employees. The new determining rule is this: 'If the monthly paid
employee is receiving not less than P240, the maximum monthly minimum wage, and his monthly pay is
uniform from January to December, he is presumed to be already paid the ten (10) paid legal holidays.
However, if deductions are made from his monthly salary on account of holidays in months where they
occur, then he is still entitled to the ten (10) paid legal holidays.
"These new interpretations must be uniformly and consistently upheld.
"This issuance shall take effect immediately.
Issue:

Whether or not the Secretary of Labor erred and acted contrary to law in promulgating Sec. 2, Rule IV, Book III of the
Integrated Rules and Policy Instruction No. 9.

Ruling:

The Secretary (Minister) of Labor had exceeded his statutory authority granted by Article 5 of the Labor Code authorizing
him to promulgate the necessary implementing rules and regulations.

The Supreme Court has ruled that:

"While it is true that the contemporaneous construction placed upon a statute by executive officers
whose duty is to enforce it should be given great weight by the courts, still if such construction is so
erroneous, as in the instant case, the same must be declared as null and void. It is the role of the
Judiciary to refine and, when necessary, correct constitutional (and/or statutory) interpretation, in the
context of the interactions of the three branches of the government, almost always in situations where
some agency of the State has engaged in action that stems ultimately from some legitimate area of
governmental power (The Supreme Court in Modern Role, C.B. Swisher, 1958, p. 36).
xxx xxx xxx

"In view of the foregoing, Section 2, Rule IV, Book III of the Rules to implement the Labor Code and
Policy Instruction No. 9 issued by the then Secretary of Labor must be declared null and void.
Accordingly, public respondent Deputy Minister of Labor Amado G. Inciong had no basis at all to deny
the members of petitioner union their regular holiday pay as directed by the Labor Code.

Since the private respondent premises its action on the invalidated rule and policy instruction, it is clear that the employees
belonging to the petitioner association are entitled to the payment of ten (10) legal holidays under Articles 82 and 94 of the
Labor Code, aside from their monthly salary. They are not among those excluded by law from the benefits of such holiday
pay.
Presidential Decree No. 800 states who are excluded from the holiday provisions of that law. The questioned Section 2,
Rule IV, Book III of the Integrated Rules and the Secretary's Policy Instruction No. 9 add another excluded group, namely,
"employees who are Uniformly paid by the month." While the additional exclusion is only in the form of a presumption that
all monthly paid employees have already been paid holiday pay, it constitutes a taking away or a deprivation which must
be in the law if it is to be valid. An administrative interpretation which diminishes the benefits of labor more than what the
statute delimits or withholds is obviously ultra vires.

170. PRODUCERS BANK OF THE PHILIPPINES vs. NATIONAL LABOR RELATIONS COMMISSION and
PRODUCERS BANK EMPLOYEES ASSOCIATION

Facts of the case:

The case originated from a complaint filed by private respondent with the Arbitration Branch, National Labor Relations
Commission (NLRC), charging petitioner with diminution of benefits, non-compliance with Wage Order No. 6 and non-
payment of holiday pay; and praying for damages.

Labor Arbiter found private respondent's claims to be unmeritorious and dismissed its complaint. In a complete reversal,
however, the NLRC granted all of private respondent's claims, except for damages. Petition filed a Motion for Partial
Reconsideration, which was denied by the NLRC; hence, recourse to the Supreme Court.
The Labor Arbiter found that the divisor used by petitioner in arriving at the employees' daily rate for the purpose of
computing salary-related benefits is 314. This finding was not disputed by the NLRC. However, the divisor was reduced
to 303 by virtue of an inter-office memorandum issued on 13 August 1986, to wit
To increase the rate of overtime pay for rank and filers, we are pleased to inform that effective August 18, 1986, the acting
Conservator approved the use of 303 days as divisor in the computation of Overtime pay. The present Policy of 314 days
as divisor used in the computation for cash conversion and determination of daily rate, among others, still remain,
Saturdays, therefore, are still considered paid rest days.
Private respondent admits that, prior to 18 August 1986, petitioner used a divisor of 314 in arriving at the daily wage rate
of monthly-salaried employees. Private respondent also concedes that the divisor was changed to 303 for purposes of
computing overtime pay only. In its Memorandum, private respondent states that
49. The facts germane to this issue are not debatable. The Memorandum Circular issued by the Acting Conservator is
clear. Prior to August 18, 1986, the petitioner bank used a divisor of 314 days in arriving at the daily wage rate of the
monthly-salaried employees. Effective August 18, 1986, this was changed. It adopted the following formula:
(Basic salary x 12 months)
= Daily Wage Rate
303 days
50. By utilizing this formula even up to the present, the conclusion is inescapable that the petitioner bank is not actually
paying its employees the regular holiday pay mandated by law. Consequently, it is bound to pay the salary differential of
its employees effective November 1, 1974 up to the present.
xxx xxx xxx
54. Since it is a question of fact, the Inter-office Memorandum dated August 13, 1986 (Annex "E") provides for a divisor
of 303 days in computing overtime pay. The clear import of this document is that from the 365 days in a year, we deduct
52 rest days which gives a total of 313 days. Now, if 313 days is the number of working days of the employees then, there
is a disputable presumption that the employees are paid their holiday pay. However, this is not so in the case at bar. The
bank uses 303 days as its divisor. Hence, it is not paying its employees their corresponding holiday pay.

Issue:

Whether or not the petitioner is not paying its employees their corresponding holiday pay.

Ruling:

Resolution issued by the NLRC in the same case are set aside, with the exception of ruling on damages.
Article 94 of the Labor Code provides that every worker shall be paid his regular daily wage during regular holidays and
that the employer may require an employee to work on any holiday but such employee shall be paid a compensation
equivalent to twice his regular rate. In this case, the Labor Arbiter found that the divisor used by petitioner in arriving at
the employees' daily rate for the purpose of computing salary-related benefits is 314. This finding was not disputed by the
NLRC. However, the divisor was reduced to 303 by virtue of an inter-office memorandum.
Proceeding from the unambiguous terms of the memorandum, the Labor Arbiter observed that the reduction of the divisor
to 303 was for the sole purpose of increasing the employees' overtime pay and was not meant to replace the use of 314 as
the divisor in the computation of the daily rate for salary-related benefits.
In Union of Filipino Employees v. Vivar, Jr. the Court held that "[t]he divisor assumes an important role in determining
whether or not holiday pay is already included in the monthly paid employee's salary and in the computation of his daily
rate." This was also our ruling in Chartered Bank Employees Association v. Ople, as follows
It is argued that even without the presumption found in the rules and in the policy instruction, the company practice
indicates that the monthly salaries of the employees are so computed as to include the holiday pay provided by law. The
petitioner contends otherwise.
One strong argument in favor of the petitioner's stand is the fact that the Chartered Bank, in computing overtime
compensation for its employees, employs a "divisor" of 251 days. The 251 working days divisor is the result of
subtracting all Saturdays, Sundays and the ten (10) legal holidays from the total number of calendar days in a year. If the
employees are already paid for all non-working days, the divisor should be 365 and not 251.
Apparently, the divisor of 314 is arrived at by subtracting all Sundays from the total number of calendar days in a year,
since Saturdays are considered paid rest days, as stated in the inter-office memorandum. Thus, the use of 314 as a divisor
leads to the inevitable conclusion that the ten legal holidays are already included therein.
We agree with the labor arbiter that the reduction of the divisor to 303 was done for the sole purpose of increasing the
employees' overtime pay, and was not meant to exclude holiday pay from the monthly salary of petitioner's employees. In
fact, it was expressly stated in the inter-office memorandum also referred to by private respondent in its pleadings
that the divisor of 314 will still be used in the computation for cash conversion and in the determination of the daily rate.
Thus, based on the records of this case and the parties' own admissions, the Court holds that petitioner has complied with
the requirements of Article 94 of the Labor Code

171. ASIAN TRANSMISSION CORPORATION vs. The Hon. COURT OF APPEALS, Thirteenth Division, HON.
FROILAN M. BACUNGAN as Voluntary Arbitrator, KISHIN A. LALWANI, Union, Union representative to the
Panel Arbitrators; BISIG NG ASIAN TRANSMISSION LABOR UNION (BATLU); HON. BIENVENIDO T.
LAGUESMA in his capacity as Secretary of Labor and Employment; and DIRECTOR CHITA G. CILINDRO in
her capacity as Director of Bureau of Working Conditions

Facts of the case:

The Department of Labor and Employment (DOLE) issued an Explanatory Bulletin dated March 11, 1993 wherein it
clarified, inter alia, that employees are entitled to 200% of their basic wage on April 9, 1993, whether unworked, which[,]
apart from being Good Friday [and, therefore, a legal holiday], is also Araw ng Kagitingan [which is also a legal holiday].
Said bulletin was reproduced on January 23, 1998, when April 9, 1998 was both Maundy Thursday and Araw ng
Kagitingan.
Despite the explanatory bulletin, petitioner [Asian Transmission Corporation] opted to pay its daily paid employees only
100% of their basic pay on April 9, 1998. Respondent Bisig ng Asian Transmission Labor Union (BATLU) protested.
In accordance with Step 6 of the grievance procedure of the Collective Bargaining Agreement (CBA) existing between
petitioner and BATLU, the controversy was submitted for voluntary arbitration. The Office of the Voluntary Arbitrator
rendered a decision directing petitioner to pay its covered employees "200% and not just 100% of their regular daily
wages for the unworked April 9, 1998 which covers two regular holidays, namely, Araw ng Kagitingan and Maundy
Thursday.

Issue:

Whether or not the petitioners should be required to pay 200% of its employees basic pay on April 9, 1998, which was
both Maundy Thursday and Araw ng Kagitingan, legal holidays.

Ruling:

Subject of interpretation in the case at bar is Article 94 of the Labor Code which reads:

ART. 94. Right to holiday pay. (a) Every worker shall be paid his regular daily wage during regular holidays, except in
retail and service establishments regularly employing less than ten (10) workers;
(b) The employer may require an employee to work on any holiday but such employee shall be paid a compensation
equivalent to twice his regular rate; and
(c) As used in this Article, "holiday" includes: New Year's Day, Maundy Thursday, Good Friday, the ninth of April, the
first of May, the twelfth of June, the fourth of July, the thirtieth of November, the twenty-fifth and thirtieth of December
and the day designated by law for holding a general election, which was amended by Executive Order No. 203 issued on
June 30, 1987, such that the regular holidays are now:

1. New Year's Day January 1

2. Maundy Thursday Movable Date
3. Good Friday Movable Date
4. Araw ng Kagitingan April 9
(Bataan and Corregidor Day)
5. Labor Day May 1
6. Independence Day June 12
7. National Heroes Day Last Sunday of August
8. Bonifacio Day November 30
9. Christmas Day December 25
10. Rizal Day December 30
 Labor Law Complete Case Digest

As reflected above, Art. 94 of the Labor Code, as amended, affords a worker the enjoyment of ten paid
regular holidays. The provision is mandatory, regardless of whether an employee is paid on a monthly or
daily basis. Unlike a bonus, which is a management prerogative, holiday pay is a statutory benefit
demandable under the law. Since a worker is entitled to the enjoyment of ten paid regular holidays, the
fact that two holidays fall on the same date should not operate to reduce to nine the ten holiday pay
benefits a worker is entitled to receive.

Moreover, Sec. 11, Rule IV, Book III of the Omnibus Rules to Implement the Labor Code provides that
"Nothing in the law or the rules shall justify an employer in withdrawing or reducing any benefits,
supplements or payments for unworked regular holidays as provided in existing individual or collective
agreement or employer practice or policy.
From the pertinent provisions of the CBA entered into by the parties, petitioner had obligated itself to pay
for the legal holidays as required by law.

172. SAN MIGUEL CORPORATION vs. THE HONORABLE COURT OF APPEALS-FORMER

THIRTEENTH DIVISION, HON. UNDERSECRETARY JOSE M. ESPAOL, JR., Hon.
CRESENCIANO B. TRAJANO, and HON. REGIONAL DIRECTOR ALLAN M. MACARAYA

Facts of the case:

The Department of Labor and Employment (DOLE) conducted a routine inspection in the premises of
San Miguel Corporation (SMC) in one of its branches and the former discovered that there was
underpayment by SMC of regular Muslim holiday pay to its employees. For failure of SMC to submit
proof that it was paying regular Muslim holiday pay to its employees, Director Macaraya of the DOLE
Iligan District issued a compliance order directing SMC to consider Muslim holidays as regular holidays
and to pay both its Muslim and non-Muslim employees holiday pay within thirty (30) days from receipt
of the order. SMC appealed to the DOLE main office, but its appeal was dismissed for having been filed
late. The dismissal of the appeal was later on reconsidered after it was found that the appeal was filed
within the reglementary period. However, the appeal was still dismissed for lack of merit and the order of
Director Macaraya was affirmed. SMC went to the Supreme Court for relief via a petition for certiorari,
which this Court referred to the Court of Appeals. The Court of Appeals modified the Orders with regard
to the payment of Muslim holiday pay from 200% to 150% of the employee's basic salary. Its motion for
reconsideration having been denied for lack of merit, SMC filed a petition for certiorari before the
Supreme Court.

Issue:

Whether or not petitioner SMC should be required the regular Muslim holiday pay given to its employees.

Ruling:

The Supreme Court found no reason to reverse the decision of the Court of Appeals. Muslim holidays are
provided under the Code of Muslim Personal Laws and should be read in conjunction with Article 94 of
the Labor Code. There should be no distinction between Muslims and non-Muslims as regards payment
of benefits for Muslim holidays. Wages and other emoluments granted by law to the working man are

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determined on the basis of the criteria laid down by laws and certainly not on the basis of the worker's
faith or religion.

173. UNION OF FILIPRO EMPLOYEES (UFE) vs. BENIGNO VIVAR, JR., NATIONAL LABOR
RELATIONS COMMISSION and NESTLE PHILIPPINES, INC. (formerly FILIPRO, INC.)

Facts of the case:

Respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National Labor Relations
Commission (NLRC) a petition for declaratory relief seeking a ruling on its rights and obligations
respecting claims of its monthly paid employees for holiday pay.

Both Filipro and the Union of Filipro Employees (UFE) agreed to submit the case for voluntary
arbitration.

The Arbitrator rendered a decision directing Filipro to:

"pay its monthly paid employees holiday pay pursuant to Article 94 of the Code, subject only to the
exclusions and limitations specified in Article 82 and such other legal restrictions as are provided for in
the Code."

Filipro filed a motion for clarification seeking (1) the limitation of the award to three years, (2) the
exclusion of salesmen, sales representatives, truck drivers, merchandisers and medical representatives
(hereinafter referred to as sales personnel) from the award of the holiday pay; and (3) deduction from the
holiday pay award of overpayment for overtime, night differential, vacation and sick leave benefits due to
the use of 251 divisor.

Petitioner UFE answered that the award should be made effective from the date of effectivity of the Labor
Code, that their sales personnel are not field personnel and are therefore entitled to holiday pay, and that
the use of 251 as divisor is an established employee benefit which cannot be diminished.

Issue:

Whether or not Nestle's sales personnel are entitled to holiday pay.

Ruling:

Under Article 82, field personnel are not entitled to holiday pay. Said article defines field personnel as
"non-agricultural employees who regularly perform their duties away from the principal place of business
or branch office of the employer and whose actual hours of work in the field cannot be determined with
reasonable certainty."
The controversy centers on the interpretation of the clause "whose actual hours of work in the field cannot
be determined with reasonable certainty.
Moreover, the requirement that "actual hours of work in the field cannot be determined with reasonable
certainty" must be read in conjunction with Rule IV, Book III of the Implementing Rules which provides:
"Rule IV Holidays with Pay.
SECTION 1. Coverage. This rule shall apply to all employees except:
xxx xxx xxx
(e) Field personnel and other employees whose time and performance is unsupervised by the employer.

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174. JOSE RIZAL COLLEGE vs. NATIONAL LABOR RELATIONS COMMISSION and
NATIONAL ALLIANCE OF TEACHERS/OFFICE WORKERS

Facts of the case:

Jose Rizal College (JCR) is a non-stock, non-profit educational institution duly organized and existing
under the laws of the Philippines. It has three groups of employees categorized as follows: (a) personnel
on monthly basis, who receive their monthly salary uniformly throughout the year, irrespective of the
actual number of working days in a month without deduction for holidays; (b) personnel on daily basis
who are paid on actual days worked and they receive unworked holiday pay and (c) collegiate faculty
who are paid on the basis of student contract hour. Before the start of the semester they sign contracts
with the college undertaking to meet their classes as per schedule.

Unable to receive their corresponding holiday pay, private respondent National Alliance of Teachers and
Office Workers (NATOW) in behalf of the faculty and personnel of Jose Rizal College filed a complaint
against the college for said alleged non-payment of holiday pay.

The Labor Arbiter rendered a decision stating that the faculty and personnel of JCR who are paid their
salary by the month are presumed to be already paid the 10 paid legal holidays and are no longer entitled
to separate payment for the said regular holidays, while the personnel who are paid their wages daily are
entitled to be paid the 10 unworked regular holidays , and Collegiate faculty who by contract are paid
compensation per student contract hour are not entitled to unworked regular holiday pay considering that
these regular holidays have been excluded in the programming of the student contact hours.

On appeal, respondent NLRC modified the decision appealed from, in the sense that teaching personnel
paid by the hour are declared to be entitled to holiday pay.

Hence, this petition.

Issue:

Whether or not the school faculty who according to their contracts are paid per lecture hour are entitled to
unworked holiday pay.

Ruling:

Under Article 94 of the Labor Code (P.D. No. 442 as amended), holiday pay applies to all employees
except those in retail and service establishments. To deprive therefore employees paid at an hourly rate of
unworked holiday pay is contrary to the policy considerations underlying such presidential enactment,
and its precursor, the Blue Sunday Law (Republic Act No. 946) apart from the constitutional mandate to
grant greater rights to labor (Constitution, Article II, Section 9)..

In addition, respondent National Labor Relations Commission ruled that the purpose of a holiday pay is
obvious; that is to prevent diminution of the monthly income of the workers on account of work
interruptions. In other words, although the worker is forced to take a rest, he earns what he should earn.
That is his holiday pay. It is no excuse therefore that the school calendar is extended whenever holidays
occur, because such happens only in cases of special holidays.

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Subject holiday pay is provided for in the Labor Code (Presidential Decree No. 442, as amended), which
reads:
"Art. 94. Right to holiday pay (a) Every worker shall be paid his regular daily wage during regular
holidays, except in retail and service establishments regularly employing less than ten (10) workers;
(b) The employer may require an employee to work on any holiday but such employee shall be paid a
compensation equivalent to twice his regular rate; . . ."

and in the Implementing Rules and Regulations, Rule IV, Book III, which reads:
"SEC. 8. Holiday pay of certain employees. (a) Private school teachers, including faculty members of
colleges and universities, may not be paid for the regular holidays during semestral vacations. They shall,
however, be paid for the regular holidays during Christmas vacations. . . .

Under the foregoing provisions, apparently, the petitioner, although a non-profit institution is under
obligation to give pay even on unworked regular holidays to hourly paid faculty members subject to the
terms and conditions provided for therein.

The decision of respondent National Labor Relations Commission is set aside, and a new one is
RENDERED:
(a) exempting petitioner from paying hourly paid faculty members their pay for regular holidays, whether
the same be during the regular semesters of the school year or during semestral, Christmas, or Holy Week
vacations;
(b) but ordering petitioner to pay said faculty members their regular hourly rate on days declared as
special holidays or for some reason classes are called off or shortened for the hours they are supposed to
have taught, whether extensions of class days be ordered or not; in case of extensions said faculty
members shall likewise be paid their hourly rates should they teach during said extensions.

175. THE CHARTERED BANK EMPLOYEES ASSOCIATION vs. HON. BLAS F. OPLE, in his
capacity as the Incumbent Secretary of Labor, and THE CHARTERED BANK

Facts of the case:

The Chartered Bank Employees Association, in representation of its monthly paid employees/members,
instituted a complaint with the Department of Labor, now Ministry of Labor and Employment (MOLE)
against Chartered Bank, for the payment of ten unworked legal holidays, as well as for premium and
overtime differentials for worked legal holidays from November 1, 1974.

The Minister of Labor dismissed the Chartered Bank Employees Associations claim for lack of merit
basing its decision on Section 2,Rule IV, Book Ill of the Integrated Rules and Policy Instruction No. 9,
which respectively provide: Sec. 2. Status of employees paid by the month.

Employees who are uniformly paid by the month, irrespective of the number of working days therein,
with a salary of not less than the statutory or established minimum wage shall be presumed to be paid for
all days in the month whether worked or not.

POLICY INSTRUCTION NO. 9.

TO: All Regional Directors
SUBJECT: PAID LEGAL HOLIDAYS
"The rules implementing PD 850 have clarified the policy in the implementation of the ten (10) paid legal
holidays. Before PD 850, the number of working days a year in a firm was considered important in

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determining entitlement to the benefit. Thus, where an employee was working for at least 313 days, he
was considered definitely already paid. If he was working for less than 313, there was no certainty
whether the ten (10) paid legal holidays were already paid to him or not.
"The ten (10) paid legal holidays law, to start with, is intended to benefit principally daily employees. In
the case of monthly, only those whose monthly salary did not yet include payment for the ten (10) paid
legal holidays are entitled to the benefit.
"Under the rules implementing PD 850, this policy has been fully clarified to eliminate controversies on
the entitlement of monthly paid employees. The new determining rule is this: 'If the monthly paid
employee is receiving not less than P240, the maximum monthly minimum wage, and his monthly pay is
uniform from January to December, he is presumed to be already paid the ten (10) paid legal holidays.
However, if deductions are made from his monthly salary on account of holidays in months where they
occur, then he is still entitled to the ten (10) paid legal holidays.
"These new interpretations must be uniformly and consistently upheld.
"This issuance shall take effect immediately.

Issue:

Whether or not the Secretary of Labor erred and acted contrary to law in promulgating Sec. 2, Rule IV,
Book III of the Integrated Rules and Policy Instruction No. 9.

Ruling:

The Secretary (Minister) of Labor had exceeded his statutory authority granted by Article 5 of the Labor
Code authorizing him to promulgate the necessary implementing rules and regulations.

The Supreme Court has ruled that:

"While it is true that the contemporaneous construction placed upon a statute by executive officers whose
duty is to enforce it should be given great weight by the courts, still if such construction is so erroneous,
as in the instant case, the same must be declared as null and void. It is the role of the Judiciary to refine
and, when necessary, correct constitutional (and/or statutory) interpretation, in the context of the
interactions of the three branches of the government, almost always in situations where some agency of
the State has engaged in action that stems ultimately from some legitimate area of governmental power
(The Supreme Court in Modern Role, C.B. Swisher, 1958, p. 36).
xxx xxx xxx
"In view of the foregoing, Section 2, Rule IV, Book III of the Rules to implement the Labor Code and
Policy Instruction No. 9 issued by the then Secretary of Labor must be declared null and void.
Accordingly, public respondent Deputy Minister of Labor Amado G. Inciong had no basis at all to deny
the members of petitioner union their regular holiday pay as directed by the Labor Code.
Since the private respondent premises its action on the invalidated rule and policy instruction, it is clear
that the employees belonging to the petitioner association are entitled to the payment of ten (10) legal
holidays under Articles 82 and 94 of the Labor Code, aside from their monthly salary. They are not
among those excluded by law from the benefits of such holiday pay.
Presidential Decree No. 800 states who are excluded from the holiday provisions of that law. The
questioned Section 2, Rule IV, Book III of the Integrated Rules and the Secretary's Policy Instruction No.
9 add another excluded group, namely, "employees who are Uniformly paid by the month." While the
additional exclusion is only in the form of a presumption that all monthly paid employees have already
been paid holiday pay, it constitutes a taking away or a deprivation which must be in the law if it is to be

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valid. An administrative interpretation which diminishes the benefits of labor more than what the statute
delimits or withholds is obviously ultra vires.

BOOK III - CONDITIONS OF EMPLOYMENT

PART I - WORKING CONDITIONS

4. HOLIDAYS Article 94 LC

A. Coverage
B. Holiday Pay
C. List of Holidays
C. Pretermission of Holiday

D. Successive Holidays
E. Double Holiday

176. IBAA EMPLOYEES UNION VS. INCIONG

FACTS
On June 20, 1975, the petitioner filed a complaint against the respondent bank for the payment of holiday
pay before the then Department of Labor, NLRC in Manila. Conciliation having failed, the case was
certified for arbitration and later on a decision was rendered by the Labor Arbiter granting petitioners
complaint. Respondent bank complied by paying the holiday pay to and including January 1976. On
December 1975, PD 850was promulgated amending the provisions of the Labor Code with the
controversial section stating that monthly paid employees receiving uniform monthly pay is presumed to
be already paid the 10 paid legal holidays. Policy instruction 9 was issued thereafter interpreting the
said rule. Respondents bank stopped the payment by reason of the promulgated PD 850 and Policy
Instruction 9.

ISSUE
Whether or not monthly paid employees are excluded from the benefit of holiday pay.

HELD
No. It is elementary in the rules of statutory construction that when the language of the law is clear and
unequivocal the law must be taken to mean exactly what it says. In the case at bar, the provisions of the
Labor Code on the entitlement to the benefits of holiday pay are clear and explicit- it provides for both the
coverage of and exclusion from the benefits. In Policy Instruction 9, the then Secretary of Labor
categorically state that the benefit is principally intended for daily paid employees, when the law clearly
states that every worker shall be paid their regular holiday pay. While it is true that the contemporaneous
construction placed upon a statue by executive officers whose duty is to enforce it should be given great
weight by the courts, still if such construction is so erroneous, the same must be declared as null and void.

177. Imbuido v. NLRC [G.R. No. 114734, March 31, 2000]

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FACTS:
Petitioner was employed as a date encoder by private respondent. From 1988 until 1991, she entered into
13 employmentcontracts with private respondent, each contract for a period of 3 months. In September
1991, petitioner and 12 other employees allegedly agreed to the filing of a PCE of the rank
and file employees of private respondent. Subsequently, petition received a termination latter due to low
volume of work. Petitioner filed a complaint for illegal dismissal. The labor Arbiterfound in favor of
petitioner ruling that she was a regular employee. The NLRC reversed the decision stating that although
petitioner is a regularemployee, she has no tenurial security beyond the period for which she was hired
(only up to the time the specific project for which she was hired was completed). Petitioner filed the
present appeal.

ISSUE:
W/N petitioner is a regular employee entitled to tenurial security and was therefore unjustly dismissed.

HELD:
Yes. Even though petitioner is a project employee, as in the case of Maraguinot, Jr. v. NLRC, the court
held that a project employee or member of a work pool may acquire the status of a regular employeewhen
the following concur:

1. there is continuous rehiring of project employees even after thecessation of a project,

2. the tasks performed by the alleged project employee are vital, necessary and indispensable to the
usual business and trade of theemployer.

Private respondent was employed as a data encoder performing duties, which are usually necessary
or desirable in the usual business or trade of the employer, continuously for a period of more than 3 years.
Being a regular employee, petitioner is entitled to security of tenure and could only be dismissed for a just
and authorized cause; low volume of work is not a valid cause for dismissal under Art. 282 or 283.
Having worked for more than 3 years, petitioner is also entitled to service incentive leave benefits from
1989 until her actual reinstatement since such is demandable after one year of service, whether continuous
or broken.

178. G.R. No. L-23076 February 27, 1969

NICANOR M. BALTAZAR, plaintiff-appellee,

vs.
SAN MIGUEL BREWERY, INC., defendant-appellant.

Facts:
The petitioner is the salesman-in-charge of San Miguel Brewery, Inc. in Dagupan warehouse with a
monthly pay of P240.00, P5.00 per diem and a commission of P0.75 per case sold. On October 9, 1956, 8
days after Baltazar was appointed as the salesman-in-charge, the regular employees in Dagupan
warehouse went on strike because of unjust treatment. Baltazar was recalled to appellants Manila Office
on the 13th of October, 1956 upon the order of his superior and conduct an investigation. The
investigation found that the employees grievances were well founded. The next day, the strikers returned
to their work voluntarily. On October 15, the petitioner was informed that he was not to return to

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Dagupan anymore but he still reported to work at the main office from October 16 to November 2, 1956
waiting for assignment. From November 3 to December 19 on the same year, he absented himself from
work without consent from his superiors and without advising them or anybody else of the reason for his
prolonged absence. He was dismissed from work because of petitioners unauthorized absence and if the
company would consider its health, welfare and retirement plan requiring sick leave, still the petitioner
did inexcusable actions since sick leave, to be considered authorized and excusable, must be certified to
by the company physician and the appellant-company informed that Baltazar was dismissed effective
November 30, 1956. Baltazar initiated a complaint which the trial court ruled that Baltazars dismissal
was justified but, however, ordering San Miguel Brewery Inc. to pay Baltazar one month separation pay,
plus the cash value of 6 months accumulated sick leave.

Issue: Whether or not the petitioner is entitled to one month separation pay and the cash value of 6
months accumulated sick leave.

Held:
No, the petitioner is not entitled to one month separation pay and the cash value of 6 months accumulated
sick leave. Under the Marcaida vs. Philippine Education Company 53 O.G. No. 23, RA 1052 makes
reference to termination of employment, instead of dismissal, to exclude employees separated from the
service for causes attributable to their own fault. It is limited in its operation, to cases of employment
without definite period. When the employment is for a fixed duration, the employer may terminate it even
before the expiration of a stipulated period, should there be a substantialbreach of obligations by
the employee; in which event the latter is not entitles to advance notice or separation pay. it would
patently, be absurd to grant a right thereto to an employee guilty of the samebreach of obligation, when
the employment is without a definite period, as if he were entitled to greater protection than employees
engaged for a fixed duration. In connection with the question of whether or not petitioner is entitled to the
cash value of 6 months accumulated sick leave, it appears that while under the last paragraph of Article 5
of appellants Rules and Regulations of Health, Welfare and Retirement Plan, unused sick leave may be
accumulated up to a maximum of 6 months, the same is not commutable or payable in cash upon the
employees option.

179. G.R. No. 172161 March 2, 2011

SLL INTERNATIONAL CABLES SPECIALIST and SONNY L. LAGON, Petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION, 4th DIVISION, ROLDAN LOPEZ,
EDGARDO ZUIGA and DANILO CAETE, Respondents.

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Issue: Whether or not private respondents are entitled to be paid a minimum wage.

Held:

Private respondents are entitled to be paid the minimum wage, whether they are regular or non-
regular employees.
Section 3, Rule VII of the Rules to Implement the Labor Code specifically enumerates those who
are not covered by the payment of minimum wage. Project employees are not among them.

PART II - WAGES Article 120-129 LC & RA 6727

1. Coverage
2. Wage

180. MABEZA VS NLRC

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FACTS:
Norma Mabeza was an employee hired by Hotel Supreme in Baguio City. In 1991, an inspection was
made by the Department of Labor and Employment (DOLE) at Hotel Supreme and the DOLE inspectors
discovered several violations by the hotel management. Immediately, the owner of the hotel, Peter Ng,
directed his employees to execute an affidavit which would purport that they have no complaints
whatsoever against Hotel Supreme. Mabeza signed the affidavit but she refused to certify it with the
prosecutors office. Later, when she reported to work, she was not allowed to take her shift. She then
asked for a leave but was not granted yet shes not being allowed to work. In May 1991, she then sued
Peter Ng for illegal dismissal. Peter Ng, in his defense, said that Mabeza abandoned her work. In July
1991, Peter Ng also filed a criminal complaint against Mabeza as he alleged that she had stolen a blanket
and some other stuff from the hotel. Peter Ng went on to amend his reply in the labor case to make it
appear that the reason why he dismissed Mabeza was because of his loss of confidence by reason of the
theft allegedly committed by Mabeza. The labor arbiter who handled the case, a certain Felipe Pati, ruled
in favor of Peter Ng.
ISSUE:
Whether or not there is abandonment in the case at bar. Whether or not loss of confidence as ground for
dismissal applies in the case at bar.
HELD:
No. The side of Peter Ng is bereft of merit so is the decision of the Labor Arbiter which was unfortunately
affirmed by the NLRC.
Abandonment
Abandonment is not present. Mabeza returned several times to inquire about the status of her work or her
employment status. She even asked for a leave but was not granted. Her asking for leave is a clear
indication that she has no intention to abandon her work with the hotel. Even the employer knows that his
purported reason of dismissing her due to abandonment will not fly so he amended his reply to indicate
that it is actually loss of confidence that led to Mabezas dismissal.
Loss of Confidence
It is true that loss of confidence is a valid ground to dismiss an employee. But this is ideally only applied
to workers whose positions require a certain level or degree of trust particularly those who are members
of the managerial staff. Evidently, an ordinary chambermaid who has to sign out for linen and other hotel
property from the property custodian each day and who has to account for each and every towel or
bedsheet utilized by the hotels guests at the end of her shift would not fall under any of these two classes
of employees for which loss of confidence, if ably supported by evidence, would normally apply. Further,
the suspicious filing by Peter Ng of a criminal case against Mabeza long after she initiated her labor
complaint against him hardly warrants serious consideration of loss of confidence as a ground of
Mabezas dismissal.

181. Songco, et al. vs. National Labor Relations Commission

G.R. Nos. 50999-51000
(March 23, 1990)

FACTS:
Zuelig filed an application for clearance to terminate the services of Songco, and others, on the ground of
retrenchment due to financial losses. During the hearing, the parties agreed that the sole issue to be

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resolved was the basis of the separation pay due. The salesmen received monthly salaries of at least
P400.00 and commission for every sale they made.

The Collective Bargaining Agreements between Zuelig and the union of which Songco, et al. were
members contained the following provision: "Any employee who is separated from employment due to
old age, sickness, death or permanent lay-off, not due to the fault of said employee, shall receive from the
company a retirement gratuity in an amount equivalent to one (1) month's salary per year of service."

The Labor Arbiter ordered Zuelig to pay Songco et al., separation pay equivalent to their one month
salary (exclusive of commissions, allowances, etc.) for every year of service with the company.

The National Labor Relations Commission sustained the Arbiter.

ISSUE:
Whether or not earned sales commissions and allowances should be included in the monthly salary of
Songco, et al. for the purpose of computing their separation pay.

RULING:

In the computation of backwages and separation pay, account must be taken not only of the basic salary
of the employee, but also of the transportation and emergency living allowances.

Even if the commissions were in the form of incentives or encouragement, so that the salesman would be
inspired to put a little more industry on jobs particularly assigned to them, still these commissions are
direct remunerations for services rendered which contributed to the increase of income of the
employee. Commission is the recompense compensation or reward of an agent, salesman, executor,
trustee, receiver, factor, broker or bailee, when the same is calculated as a percentage on the amount of his
transactions or on the profit to the principal. The nature of the work of a salesman and the reason for such
type of remuneration for services rendered demonstrate that commissions are part of Songco, et al's wage
or salary.

The Court takes judicial notice of the fact that some salesmen do not receive any basic salary, but depend
on commissions and allowances or commissions alone, although an employer-employee relationships
exists.

If the opposite view is adopted, i.e., that commissions do not form part of the wage or salary, then in
effect, we will be saying that this kind of salesmen do not receive any salary and, therefore, not entitled to
separation pay in the event of discharge from employment. This narrow interpretation is not in accord
with the liberal spirit of the labor laws, and considering the purpose of separation pay which is, to
alleviate the difficulties which confront a dismissed employee thrown to the streets to face the harsh
necessities of life.

In Soriano vs. NLRC (155 SCRA 124), we held that the commissions also claimed by the employee
(override commission plus net deposit incentive) are not properly includible in such base figure since
such commissions must be earned by actual market transactions attributable to the petitioner
[salesman]. Since the commissions in the present case were earned by actual transactions attributable to
Song, et al., these should be included in their separation pay. In the computation thereof, what should be
taken into account is the average commission earned during their last year of employment.

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182. Atok Big Wedge Mutual Benefit Association v Atok Big Wedge Mining Co. Inc.
GR No. L-7349
July 19, 1955

FACTS:
On September 4, 1950, a demand was submitted to petitioner by respondent union through its officers for
various concessions, among which were:
(a) An increase of P0.50 in wages;
(b) Commutation of sick and vacation leave if not enjoyed during the year;
(c) Various privileges, such as free medical care, medicine, and hospitalization;
(d) Right to a closed shop, check off etc.;
(e) No dismissal without prior just cause and with a prior investigation, etc.

Some of the demands were granted by petitioner and the others were rejected. Hearings were held in the
Court of Industrial Relations. After the hearing, the respondent court rendered a decision fixing the
minimum wage for the laborers at P3.20 without rice ration and 2.65 a day with rice ration, declaring that
additional compensation representing efficiency bonus should not be included as part of the wage, and
making the award effective from September 4, 1950 (the date of the presentation of the original demand,
instead of from April 5, 1951, the date of the amended demand).

Atok Company asked the Court for authority to stop operations & lay off employees and laborers, for the
reason that due to the heavy losses, increased taxes, high cost of materials, negligible quantity of ore
deports, and the enforcement of the Minimum Wage Law, the continued operation of the company and
the consequent lay-off of hundreds of laborers and employees.

The parties reached an agreement on October 29, 1952 after the SC decision which states agreement that
the following facilities heretofore given or actually being given by petitioner to its workers and laborers,
and which constitute as part of their wages, be valued as follows:

Rice ration P.55 per day

Housing facility 40 per day
All other facilities at least 85 per day

It is understood that the said amount of facilities valued at the above mentioned prices, may be charged in
full or partially by the Company against laborer or employee, as they may see fit pursuant to the
exigencies of its operation.

This was approved by the Court on December 26, 1952.

Later, another case was decided involving the 2 parties giving the employees minimum cash wage of 3.45
a day with rice ration or 4.00 without rice ration.

ISSUES:

(1) Which of the two decisions would prevail? The agreement or the subsequent decision giving
the employees minimum case wage?, and;
WON the Agreement of October 29, 1952 from the minimum daily wage of P4 would be a waiver of the
minimum wage fixed by the law and hence null and void, since RA 602 sec. 20 provides that no
agreement or contract, oral or written, to accept a lower wage or less than any other under this Act, shall
be valid.

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(2) WON additional compensation should be paid by the Company to its workers for work rendered on
Sundays and holidays which should be based on the minimum wage of 4.00 and not on the cash portion
which is 2.20. [Currently the company pays additional compensation of 50% based on the 2.20 wage]

HELD:
(1) The Agreement subsists.

An agreement to deduct certain facilities received by the laborers from their employer is not a waiver of
the minimum wage fixed by the law. Wage includes the fair and reasonable value as determined by the
Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the
employee (Sec 2 of RA 602).

Thus, the law permits the deduction of such facilities from the laborers minimum wage of P4, as long as
their value is fair and reasonable

(2) NO. The Company is correct.

Section 4 of the Commonwealth Act No. 444 (Eight Hour Labor Law) provides:
No person, firm, or corporations... shall compel an employee or laborer to work during Sundays and
holidays, unless he is paid an additional sum of at least 25% of his regular remuneration.
Thus, the Company even pays the laborers higher wage than the minimum. Thus, no law is violated.
OTHER NOTES:

DIFFERENCE BETWEEN A SUPPLEMENT and FACILITY

(1) Supplements, defined extra remuneration or special privileges or benefits given to or received by
the laborers over and above their ordinary earnings or wages [vacation and holidays not worked; paid sick
leave or maternity leave; overtime rate in excess of what is required by law; sick, pension, retirement and
death benefits; profit sharing; family allowances; Christmas, war risk and cost of living bonuses or other
bonuses other than those paid as a reward for extra output or time spent on the job].

(2) Facilities, defined items of expense necessary for laborers and his familys existence and
subsistence, so that by express provision of the law, they form part of the wage and when furnished by the
employer are deductible therefrom since if they are not so furnished, the laborer would spend and pay for
them just the same.

TOPIC: BASIC WAGE

190. CAGAYAN SUGAR MILLING COMPANY vs. SECRETARY OF LABOR

G.R. No. 128399
FACTS:
A Regional Wage Order was issued by the Regional Tripartite Wage and Productivity Board, Regional
Office No. II of the Department of Labor and Employment which increased the statutory minimum wage
rates applicable to workers and employees in the private sector in Region II. The labor inspectors examined
the books of petitioner and found that they have violated the wage order. The regional director ruled that
petitioner violated the Wage Order by failing to implement an across the board increase in the salary of its
employees and ordered petitioner to pay the deficiency in the salary of its employees. Petitioner appealed

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to the Labor Secretary and on the same date, the Regional Wage Board issued another Wage order which
amended the earlier order. It now stated that the workers and employees in the private sector in Region 2
shall receive an across the board wage increase. The Secretary of Labor dismissed petitioner's appeal and
affirmed the Order of Regional Director. Upon the issuance of the writ of execution, petitioner contended
that they were deprived of their right to due process, that the wage order clearly provided for the fixing of
a statutory minimum wage rate and not an across the board increase in wages and that the decision of the
secretary of labor and employment is null and void for lack of any legal basis. Petitioner assails the validity
of Wage Order on the ground that it was passed without the required public consultation and newspaper
publication. Thus, petitioner claims that the Labor Secretary abused his discretion in upholding the validity
of said wage order.
ISSUE:
WON the wage order is valid.
HELD:
No. Article 123 of the Labor Code provides that Whenever conditions in the region so warrant,
the Regional Board shall investigate and study all pertinent facts, and, based on the standards and criteria
herein prescribed, shall proceed to determine whether a Wage Order should be issued. Any such Wage
Order shall take effect after fifteen (15) days from its complete publication in at least one (1) newspaper of
general circulation in the region. "In the performance of its wage-determining functions, the Regional Board
shall conduct public hearings/consultations, giving notices to employees' and employers' groups and other
interested parties. The record shows that there was no prior public consultation or hearings and newspaper
publication insofar as the said wage order is concerned. The Court was not persuaded on the public
respondents' position that there was no need to comply with the legal requirements of consultation and
newspaper publication as the second Wage Order merely clarified the ambiguous provision of the original
wage order.
In sum, the Court held that the wage order is invalid for lack of public consultations and hearings
and non-publication in a newspaper of general circulation, in violation of Article 123 of the Labor Code.
They likewise found that the Secretary of Labor committed grave abuse of discretion in upholding the
findings of Regional Director that petitioner violated the Wage Order.

191. Eagle Security Agency, Inc. vs. NLRC

173 SCRA 479

FACTS:
The Philippine Tuberculosis Society, Inc. (PTSI) and Eagle Security Agency, Inc. entered into a
Contract for Security Services wherein the latter agreed to provide security services in the formers
premises. Pursuant to this agreement, private respondents were assigned by EAGLE to PTSI as security
guards. Subsequently, a complaint was filed by private respondents against PTSI and EAGLE for unpaid
wage and allowance increases with interest plus damages and attorneys fees. The labor arbiter rendered a
decision and ordered Eagle Security Agency, Inc. and Philippine Tuberculosis Society, Inc. to pay jointly
and severally the sixteen complainants of their unpaid wages and allowances. The Court, also upon motion

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of PTSI, resolved to issue a temporary restraining order enjoining the NLRC from enforcing and/or carrying
out its decision and resolution. Petitioners PTSI and EAGLE, in this special civil action of certiorari,
impugn the decision of the NLRC as having been issued with grave abuse of discretion amounting to lack
or excess of jurisdiction. Both PTSI and EAGLE point to the other as the one who should be solely liable
for paying the increases.
ISSUE:
WON PTSI and Eagle Security Agency are liable for the payment of the minimum wage and
cost of living allowance increases to security guards.

HELD:
Yes. The Court finds that the NLRC acted correctly in ordering the two petitioners to jointly and
severally pay the wage and allowance increases to the security guards. Petitioners solidary liability for the
amounts due the security guards finds support in Articles 106, 107 and 109 of the Labor Code. This joint
and several liability of the contractor and the principal is mandated by the Labor Code to assure compliance
of the provisions therein including the statutory minimum wage [Article 99, Labor Code]. The contractor
is made liable by virtue of his status as direct employer. The principal, on the other hand, is made the
indirect employer of the contractors employees for purposes of paying the employees their wages should
the contractor be unable to pay them. This joint and several liability facilitates, if not guarantees, payment
of the workers performance of any work, task, job or project, thus giving the workers ample protection as
mandated by the 1987 .

Notes:
ART. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person
for the performance of the formers work, the employees of the contractor and of the latters subcontractor,
if any, shall be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with
this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such
employees to the extent that he is liable to employees directly employed by him.
ART. 107. Indirect employer. The provisions of the immediately preceding Article shall likewise apply to
any person, partnership, association or corporation which, not being an employer, contracts with an
independent contractor for the performance of any work, task, job or project.
ART. 109. Solidary liability. The provisions of existing laws to the contrary notwithstanding, every
employer or indirect employer shall be held responsible with his contractor or subcontractor for any
violation of this Code. For purposes of determining the extent of the civil liability under this Chapter, they
shall be considered as direct employers.

192. LMG Chemicals Corporation vs. Secretary of the Department of Labor and
Employment 356 SCRA 577
FACTS:
LMG Chemicals Corporation and the Chemical Workers Union started a negotiation for
a new Collective Bargaining Agreement (CBA). However, no agreement was reached on the issue of

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wage increase since both parties have different positions. The Secretary of Labor and Employment,
finding the instant labor dispute impressed with national interest, assumed jurisdiction over the same. In
compliance with the directive of the Labor Secretary, the parties submitted their respective position
papers. In its position paper, petitioner made a turn-around, stating that it could no longer afford to grant
its previous offer due to serious financial losses. In its reply to petitioners position paper, respondent
union claimed it had a positive performance in terms of income during the covered period. The Secretary
of Labor and Employment issued an order that increased the amount of wage and stated that the new
Collective Bargaining Agreement which the parties will sign pursuant to the Order shall retroact to
January 1, 1996. Petitioner contended that the secretary of labor committed grave abuse of discretion
disregarding the evidence of petitioners financial losses and in granting a p140.00 wage increase to the
respondent union and in decreeing that the new collective bargaining agreement to be signed by the
parties shall retroact to January 1, 1996.

ISSUE:
WON the secretary of labor committed grave abuse of discretion.

HELD:
No. It is well settled in our jurisprudence that the authority of the Secretary of Labor to assume
jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable
to national interest includes and extends to all questions and controversies arising therefrom. The power is
plenary and discretionary in nature to enable him to effectively and efficiently dispose of the primary
dispute. To deprive respondent Secretary of such power and discretion would run counter to the well-
established rule that all doubts in the interpretation of labor laws should be resolved in favor of labor. In
upholding the assailed orders of respondent Secretary, this Court is only giving meaning to this rule. Indeed,
the Court should help labor authorities in providing workers immediate benefits, without being hampered
by arbitration or litigation processes that prove to be not only nerve-wracking but financially burdensome
in the long run.
193. Metro bank vs. NLRC
GR No. 102636
FACTS:

The bank entered into a collective bargaining agreement with the MBTCEU,
granting a monthly P900 wage increase effective 01 January 1989, P600 wage increase 01 January 1990,
and P200 wage increase effective 01 January 1991. Only regular employees as of 01 January 1989 were
given the increase to the exclusion of probationary employees. Barely a month later, Republic Act 6727,
"an act to rationalize wage policy determination be establishing the mechanism and proper standards
thereof, fixing new wage rates, providing wage incentives for industrial dispersal to the countryside, and
for other purposes," took effect. Pursuant to the provisions, the bank gave the P25 increase per day, or P750
a month, to its probationary employees and to those who had been promoted to regular or permanent status
before 01 July 1989 but whose daily rate was P100 and below. The bank refused to give the same increase
to its regular employees who were receiving more than P100 per day and recipients of the P900 CBA
increase. Contending that the bank's implementation of Republic Act 6727 resulted in the categorization of
the employees, the MBTCEU sought from the bank the correction of the alleged distortion in pay. In order
to avert an impeding strike, the bank petitioned the Secretary of Labor to assume jurisdiction over the case

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or to certify the same to the National Labor Relations Commission (NLRC) under Article 263 (g) of the
Labor Code. The parties ultimately agreed to refer the issue for compulsory arbitration to the NLRC.

The labor arbiter concluded that since the "intentional quantitative difference" in wage or salary
rates between and among groups of employees is not based purely on skills or length of service but also on
"other logical bases of differentiation, a P900.00 wage gap intentionally provided in a collective bargaining
agreement as a quantitative difference in wage between those who WERE regular employees as of January
1, 1989 and those who WERE NOT as of that date, is definitely a logical basis of differentiation (that)
deserves protection from any distorting statutory wage increase." He then directed to restore to
complainants and their members the Nine Hundred (P900.00) Pesos CBA wage gap they used to enjoy over
non-regular employees as of January 1, 1989 by granting them a Seven Hundred Fifty (P750.00) Pesos
monthly increase effective July 1, 1989.

ISSUE:
WON a wage distortion exists as a consequence of the grant of a wage increase to certain
employees is a question of fact the determination of which is the statutory function of the NLRC.

HELD:
Judicial review of labor cases does not go beyond the evaluation of the sufficiency of the evidence
upon which the labor officials findings rest. As such, factual findings of the NLRC are generally accorded
not only respect but also finality provided that its decisions are supported by substantial evidence and devoid
of any taint of unfairness or arbitrariness. When, however, the members of the same labor tribunal are not
in accord on those aspects of a case, as in this case, this Court is well cautioned not to be as so conscious
in passing upon the sufficiency of the evidence, let alone the conclusions derived therefrom.
The definition of wage distortion, aforequoted, shows that such distortion can so exist when, as
a result of an increase in the prescribed wage rate, an elimination or severe contraction of intentional
quantitative differences in wage or salary rates would occur between and among employee groups in an
establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills,
length of service, or other logical bases of differentiation. In mandating an adjustment, the law did not
require that there be an elimination or total abrogation of quantitative wage or salary differences; a severe
contraction thereof is enough. The Solicitor General has correctly emphasized that the intention of the
parties, whether the benefits under a collective bargaining agreement should be equated with those granted
by law or not unless there are compelling reasons otherwise must prevail and be given effect.
194. Prubankers Association vs. Prudential Bank & Trust
302 SCRA 74
FACTS:
The Regional Tripartite Wages and Productivity Board (RTWPB) Region V issued Wage Order
No. RB 05-03 which provided for a Cost of Living Allowance (COLA) to workers in the private sector who
had rendered service for at least three (3) months before its effectivity, and for the same period thereafter.
RTWPB Region VII however followed suit but the COLA amounts in other cities nationwide were different
from that issued by RTWPN region V. This caused Prubankers Association to write the petitioner
requesting that the Labor Management Committee be immediately convened to discuss and resolve the
alleged wage distortion created in the salary structure upon the implementation of the said wage orders. As
the grievance could not be settled in the meetings, the parties agreed to submit the matter to voluntary

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arbitration. Respondent brought the case to appeal and was favored by CA, petitioner then sought the review
by SC. It argued that a wage distortion exists, because the implementation of the two Wage Orders has
resulted in the discrepancy in the compensation of employees of similar pay classification in different
regions.

ISSUE:
WON the two wage orders resulting in the discrepancy of employees compensation in different regions
also results to a wage distortion.

HELD:
No. Wage distortion involves four elements:

1. An existing hierarchy of positions with corresponding salary rates

2. A significant change in the salary rate of a lower pay class without a concomitant increase in the salary
rate of a higher one
3. The elimination of the distinction between the two levels
4. The existence of the distortion in the same region of the country.

In the present case, it is clear that no wage distortion resulted when respondent implemented the
subject Wage Orders in the covered branches. In the said branches, there was an increase in the salary rates
of all pay classes. Furthermore, the hierarchy of positions based on skills, length of service and other logical
bases of differentiation was preserved. In other words, the quantitative difference in compensation between
different pay classes remained the same in all branches in the affected region. Put differently, the distinction
between Pay Class 1 and Pay Class 2, for example, was not eliminated as a result of the implementation of
the two Wage Orders in the said region. Hence, it cannot be said that there was a wage distortion.

195. Producers Bank vs. NLRC

355 SCRA 489
FACTS:
The present petition originated from a complaint filed by private respondent to the National Labor
Relations Commission (NLRC), charging petitioner with diminution of benefits, noncompliance with Wage
Order No. 6 and non-payment of holiday pay. In addition, private respondent prayed for damages. The labor
found private respondents claims to be unmeritorious and dismissed its complaint. However, NLRC
granted all of private respondents claims, except for damages. Petitioner argues that it complied with Wage
Order No. 6 because the first year salary and allowance increase provided for under the collective
bargaining agreement can be credited against the wage and allowance increase mandated by such wage
order. On the other hand, private respondent contends that the first year salary and allowance increases
under the collective bargaining agreement cannot be applied towards the satisfaction of the increases
prescribed by Wage Order No. 6 because the former were not granted within the period of creditability
provided for in such wage order.

ISSUE:
WON the contention of private respondent is correct.

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HELD:
The creditability provision in Wage Order No. 6 is based on important public policy, that is, the
encouragement of employers to grant wage and allowance increases to their employees higher than the
minimum rates of increases prescribed by statute or administrative regulation. The Court held in Apex
Mining Company, Inc. v. NLRC that[t]o obliterate the creditability provisions in the Wage Orders
through interpretation or otherwise, and to compel employers simply to add on legislated increases in
salaries or allowances without regard to what is already being paid, would be to penalize employers who
grant their workers more than the statutorily prescribed minimum rates of increases. Clearly, this would be
counterproductive so far as securing the interest of labor is concerned. The creditability provisions in the
Wage Orders prevent the penalizing of employers who are industry leaders and who do not wait for
statutorily prescribed increases in salary or allowances and pay their workers more than what the law or
regulations require. The Court set aside the NLRC decision.

196. Traders Royal Bank vs. NLRC

GR. No. 88168
FACTS:

The Union, through its president, filed a letter-complaint against TRB with the Conciliation
Division of the Bureau of Labor Relations claiming the diminution of benefits being enjoyed by the
employees since time immemorial, e.g. mid-year bonus, from two (2) months gross pay to two (2) months
basic and year-end bonus from three (3) months gross to only two (2) months. In its answer to the union's
complaint, TRB pointed out that the NLRC, not the Bureau of Labor Relations, had jurisdiction over the
money claims of the employees. In the meantime, the parties who had been negotiating for a collective
bargaining agreement, agreed on the terms of the CBA. However, the union insisted on pursuing the case,
arguing that the CBA would apply prospectively only to claims arising after its effectivity. Petitioner, on
the other hand, insisted that the practice of giving them bonuses at year's end, would depend on how
profitable the operation of the bank had been. Generally, the bonus given was two (2) months basic mid-
year and two (2) months gross end-year. NLRC rendered a decision in favor of the employees and ordered
respondent bank to pay petitioner members-employees.

ISSUE:

WON bonuses are part of labor standards.

HELD:

No. A bonus is "a gratuity or act of liberality of the giver which the recipient has no right to demand
as a matter of right". "It is something given in addition to what is ordinarily received by or strictly due the
recipient." The granting of a bonus is basically a management prerogative which cannot be forced upon the
employer "who may not be obliged to assume the onerous burden of granting bonuses or other benefits
aside from the employee's basic salaries or wages. It is clear from the above-cited rulings that the petitioner
may not be obliged to pay bonuses to its employees. The matter of giving them bonuses over and above
their lawful salaries and allowances is entirely dependent on the profits, if any, realized by the Bank from
its operations during the past year. Private respondent's contention, that the decrease in the midyear and
year-end bonuses constituted a diminution of the employees' salaries, is not correct, for bonuses are not part
of labor standards in the same class as salaries, cost of living allowances, holiday pay, and leave benefits,
which are provided by the Labor Code.

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TOPIC:

Bonus- Part of wages

197. L.G. Marcos, et.al. vs. NLRC, et. Al.,

G.R. No. 111744, 8 September 1995

Facts:

Petitioners were regular employees of private respondent Insular Life Assurance Co., Ltd., but they
were dismissed when their positions were declared redundant. A special redundancy were paid to them,
which included payment of accrued vacation leave and fifty percent(50%) of unused current sick leave;
special redundancy benefit, equivalent to three (3) months salary for every year of service; and additional
cash benefits, in lieu of other benefits provided by the company or required by law.
Petitioners questioned the redundancy package. They claimed that they should receive their
respective service awards and other prorated bonuses which they had earned at the time they were
dismissed. Thereafter, private respondent required petitioners to execute a Release and Quitclaim, and
petitioners complied but with a written protest reiterating their previous demand that they were nonetheless
entitled to receive their service awards.
In the same year, private respondent celebrated its 80th anniversary wherein the management
approved the grant of an anniversary bonus and on March 26, the company announced the grant of
performance bonus. Despite the opinion of the DOLE, (which provides among others their entitlement to
service award) respondent refused to pay petitioners service awards.

Issue:
Whether or not the NLRC committed reversible error or grave abuse of discretion in affirming the
validity of the Release and Quitclaim and, consequently, that petitioners are not entitled to payment of
service awards and other bonuses?

Held:

Yes.
Under prevailing jurisprudence, the fact that an employee has signed a satisfaction receipt for his
claims does not necessarily result in the waiver thereof. The law does not consider as valid any agreement
whereby a worker agrees to receive less compensation than what he is entitled to recover. A deed of release
or quitclaim cannot bar an employee from demanding benefits to which he is legally entitled.
The reason why quitclaims are commonly frowned upon as contrary to public policy, and why they
are held to be ineffective to bar claims for the full measure of the workers legal rights, is the fact that the
employer and the employee obviously do not stand on the same footing. The employer drove the employee
on the wall. The latter must have to get the money. Because, out of a job, he had to face the harsh necessities
of life. He thus found himself in position to resist money offered. His, then, is a case of adherence, not of
choice. One thing sure, however, is that petitioners did not relent on their claim. They pressed it. They are
deemed not have waived any of their rights. Renuntiatio non praesumitur.

No. 7 13th Month Pay

198. JPL Marketing Promotions vs. CA

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G.R. No. 151966, July 8, 2006

Facts:
JPL Marketing and Promotions is a domestic corporation engaged in the business of recruitment
and placement of workers. On the other hand, private respondents Gonzales, Abessa and Aninipot were
employed by JPL as merchandisers on separate dates and assigned at different establishments in Naga City
and Daet, Camarines Norte as attendants to the display of California Marketing Corporation, one of the JPL
clients.
JPL notified the private respondents that CMC would stop its direct merchandising activity in the
Bicol Region, Isabela, and Cagayan Valley effective August 15, 1996. They were advised to wait for further
notice as they would be transferred to other clients. However, on October 17, 1996, private respondents
Abesa and Gonzales filed before the NLRC complaints for illegal dismissal, praying separation pay, 13th
month pay, and service incentive leave pay and payment for moral damages. Aninipot filed a similar case
thereafter.

Issue:
Whether or not the respondents are entitled to separation pay, 13th month pay and service incentive
leave pay?

Held:
No separation pay. Yes 13th month pay and service incentive leave pay
Under Arts. 283 and 284 of the Labor Code, separation pay is authorized only in cases of dismissals
due to any of these reasons: (a) installation of labor saving devices; (b) redundancy; (c) retrenchment; (d)
cessation of the employer's business; and (e) when the employee is suffering from a disease and his
continued employment is prohibited by law or is prejudicial to his health and to the health
of his co-employees. However, separation pay shall be allowed as a measure of social justice in those cases
where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his
moral character, but only when he was illegally dismissed. In addition, Sec. 4(b), Rule I, Book VI of the
Implementing Rules to Implement the Labor Code provides for the payment of separation pay to an
employee entitled to reinstatement but the establishment where he is to be reinstated has closed or has
ceased operations or his present position no longer exists at the time of reinstatement for reasons not
attributable to the employer.
The common denominator of the instances where payment of separation pay is warranted is that
the employee was dismissed by the employer. In the instant case, there was no dismissal to speak of. Private
respondents were simply not dismissed at all, whether legally or illegally. What they received from JPL
was not a notice of termination of employment, but a memo informing them of the termination of CMC's
contract with JPL. More importantly, they were advised that they were to be reassigned. At that time, there
was no severance of employment to speak of. Furthermore, Art. 286 of the Labor Code allows the bona
fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months,
wherein employee/employees are placed on the so-called "floating status." When that "floating status" of
an employee lasts for more than six months, he may be considered to have been illegally dismissed from
the service. Thus, he is entitled to the corresponding benefits for his separation, and this would apply to
suspension either of the entire business or of a specific component thereof. As clearly borne out by the
records of this case, private respondents sought employment from other establishments even before the
expiration of the six (6)-month period provided by law. As they admitted in their comment, all three of
them applied for and were employed by another establishment after they received the notice from JPL. JPL
did not terminate their employment; they themselves severed their relations with JPL. Thus, they are not
entitled to separation pay.

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Nonetheless, JPL cannot escape the payment of 13th month pay and service incentive leave
pay to private respondents. Said benefits are mandated by law and should be given to employees as a
matter of right.

199. Honda Phils., Inc. vs. Samahan ng Malayang Manggagawa sa Honda

G.R. No. 14556, June 15, 2005

Facts:
Honda and Samahan ng Malayang Manggagawa agreed in the maintenance of the 13 th month pay
and shall grant a 14th month pay to the employees. When the parties failed to agree on re-negotiations of
the CBA, the union file a notice of strike on the ground of bargaining deadlock. The Secretary of Labor
assumed jurisdiction over the labor dispute.
However, the union went on strike on the ground of ULP because the Company illegally contracted
out work. The Secretary of Labor assumed jurisdiction and certified the case to the NLRC compulsory
arbitration. The striking employees were ordered to return to work and the management accepted them back
under the same terms prior to strike staged.
The management of Honda issued a memorandum announcing its new computation of the 13th and
th
14 month pay whereby the thirty-one day long strike shall be considered unworked days for purposes of
computing said benefits. As per the companys new formula, the amount equivalent to 1/12 of the
employees basic salary shall be deducted from these bonuses. This computation was agreed by the Bureau
of Working Conditions.
The Union opposed the pro-rated computation of the bonuses.
The VA ruled that the Hondas pro-rated of the 13th and 14th month pay and financial assistance to
its employees was invalid. The appellate court affirmed the decision of the VA.

Issue:
Whether or not the pro-rated computation of the 13th month pay and other bonuses in question is
valid and lawful?

Held:
No.
A CBA refers to the negotiated contract between a legitimate labor organization and the employer
concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit.
As in all contracts, the parties in a CBA may establish such stipulatioins, clauses, terms and conditions as
they may deem convenient provided these are not contrary to law, morals good customs, public order or
public policy. Thus, where the CBA is clear and unambiguous, it becomes the law between the parties and
compliance therewith is mandated by the express policy of the law.
In the instance case, a cursory reading of the provisions in the CBA will show that they did not
state categorically whether the computation of the 13th month pay, 14th month pay and the financial
assistance would be based on one full months basic salary of the employees, or pro-rated based on the
compensation actually received. The ambiguity should property be resolved in favor of labor. The
computation of the 13th month pay should be based on the length of service not on the actual wage earned
by the worker.

200. Sevilla Trading Company vs. Semana

April 28, 2004

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Facts:
For two to three years prior to 1999, Sevilla Trading Company added to the base figure, in its
computation of the 13th month pay, the amount of leaves and other related benefits received by the
employees which are beyond the basic pay. However, Sevilla effected a change in the computation of the
13th month pay after it discovered error of including non-basic pay or other benefits in the base figure.
The daily piece-rate workers represented by Sevilla Trading Workers Union contested the new
computation and reduction of their 13th month pay. The controversy was later submitted to Accredited
Voluntary Arbitrator Semana.
The Union alleged that Sevilla violated the rule prohibiting the elimination or diminution of
employees benefits. They claimed that the amount of leaves and other related benefits in the CBA should
be included in the base figure in the computation of their 13th month pay.
On the other hand, Sevilla insisted that the computation of the 13th month pay is based on basic
salary, excluding benefits such as leaves with pay, as per P.D. No. 851, as amended. It maintained that in
adjusting its computation of the 13th month pay, it merely rectified the mistake its payroll staff committed
in the previous years.
The Voluntary Arbitrator decided in favor of the Union and ordered Sevilla to include leaves and
other benefits in the computation of the 13th month pay. The CA sustained the decision of the VA.

Issue:
Whether or not the petition is meritorious?

Held:
No.
The proper remedy from the adverse decision of the VA is a petition for review under Rule 43 not
a petition for certiorari under Rule 65.
It is elementary that the special civil action of certiorari under Rule 65 is not, and cannot be
substitute for an appeal, where the latter remedy is available. In this case, Sevilla Trading failed to file an
appeal within the 15-day reglementary period from its notice of the adverse decision of VA. Instead of
filing under Rule 43, Sevilla filed a petition for certiorari under Rule 65. Thus, the decision of VA had
become final and executory. Hence, the CA no longer had appellate jurisdiction to alter or nullify the
decision of the VA.
The employers practice of including non-basic benefits in the computation of their 13th month pay
for at least two (2) years cannot be unilaterally withdrawn without violating the prohibition on non-
diminution of benefits. To be considered an employer practice which cannot be unilaterally withdrawn; it
should have been practiced over a long period of time and must be shown to have been consistent and
deliberate. With regard to the length of time the company practice should have been exercised to constitute
voluntary employer practice, jurisprudence has not laid down any rule requiring a specific minimum
number of years. In the case at bar, Sevilla Trading kept the practice of including non-basic benefits in the
computation of their 13th month pay for at least two (2) years. This constitutes voluntary employer practice
which cannot be unilaterally withdrawn by the employer without violating Article 100 of the Labor Code
which prohibits elimination by the employer of the employees existing benefits.

201. Framanlis Farms, Inc. vs. Ministry of Labor

G.R. No. 72616-17, March 8, 1989

Facts:

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Eighteen employees filed against Framanlis Farms two labor standard cases alleging that in 1977
to 1979 they were not paid emergency cost of living allowance (ECOLA) minimum wage, 13th month pay,
holiday pay, and service incentive leave pay.
In defense, Framanlis alleged that the private respondents were not regular workers on their
hacienda but were migratory (sacadas) or pakyaw workers who worked on-and-off and were hired
seasonally, or only during the milling season, to do piece-work on the farms. Hence, they were not entitled
to the benefits claimed by them. It also allege that it is exempted from payment of 13 th month pay since it
had substantially complied with the requirement by extending yearly bonuses and other benefits amounting
to not less than 1/12 of their basic salary in the form of a weekly subsidy of choice pork meat and free light
or electricity.
The RD directed Framanlis Farms to pay the employees their benefits but not the 13th month pay.
On appeal, the Deputy Minister ordered Framanlis to pay all non-pakyaw workers their 13th month pay for
the years 1978 and 1979.

Issue:
Whether or not benefits in the form of food or free electricity are proper substitutes for the 13th
month pay?

Held:
No.
Under Section 3 of PD No. 851, such benefits in the form of food or free electricity, assuming they
were given, were not a proper substitute for the 13th month pay required by law. Neither may year-end
rewards for loyalty and service be considered in lieu of 13th month pay.
Likewise, Section 10 of the Implementing Rules of PD No. 851 provides the prohibition against
reduction or elimination of benefits at the time of the promulgation of 13th Month Pay Law.

202. Universal Corn Products vs. NLRC

G.R. No. 60337, August 21, 1987

Facts:
Universal Corn Products and Universal Corn Products Workers Union entered into a CBA in which
it was provided that the Company shall grant all regular workers within the bargaining unit with at least
one year of continuous service, a Christmas bonus equivalent to the regular wages for seven working days.
The CBA expired without being renewed. Simultaneously, they entered into a collective bargaining
agreement for the years from 1979 to 1981. Like the addendum, the new CBA did not refer to the
Christmas bonus therefore paid but dealt only with salary adjustments.
For failure of the petitioner to pay the seven-day Christmas bonus for 1975 to 1978 inclusive, in
accordance with the 1972 CBA, the Union filed a case against the company. The Labor Arbiter ruled that
the payment of the 13th month pay precluded the payment of further Christmas bonus. The NLRC ruled
directed the company to pay its workers their 7-day bonus.
Universal Corn Products alleged that the new agreements deliberately excluded the grant of
Christmas bonus with the enactment of PD No. 851. If further claims that since 1975, it had been paying
its employees 13th month pay pursuant to the Decree.

Issue:
Whether or not the petition is impressed with merit?

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Held:

No.
If the Christmas bonus was included in the 13th month pay, then there would be no need for having
a specific provision on Christmas bonus in the CBA but it did not provide for a bonus in graduated amounts
depending on the length of service of the employee. The intention is clear therefore that the bonus provided
in the CBA was meant to be in addition to the legal requirement. Moreover, why exclude the payment of
the 1978 Christmas bonus and pay only the 1979-1980 bonuses. The classification of the companys
workers in the CBA according to their years of service supports the allegation that the reason for the
payment of bonus was to give bigger award to the senior employees-a purpose which is not found by PD
851. A bonus under the CBA is an obligation created by the contract between the management and
workers while the 13th month pay is mandated by the law.
In this case, the seven-day bonus here demanded to be in addition to the legal requirement. The
Christmas bonus provided in the CBA accords a reward, in this case, for loyalty, to certain employees. This
is evident from the stipulation granting the bonus in question to workers with at least one (1) year of
continuous service.

203. San Miguel Corporation vs. Inciong et. al., 103 SCRA 139

Facts:
Cagayan Coca-Cola Free Workers Union filed a complaint against San Miguel Corporation for
failure to include in the computation of the 13th month pay such items as sick, vacation, or maternity leaves,
premium for work done on rest days and special holidays, including pay for regular holidays and night
differentials.
San Miguel contended that PD 851 speaks only of basic salary as basis for the determination of the
13th month pay. Hence, all other benefits and holiday pays do not form part of the basic salary.
The DOLE Regional Office ordered San Miguel Corporation to pay the difference of whatever
earnings and the amount actually received as 13th month pay excluding overtime premium and emergency
cost of living allowance. The Deputy Minister of Labor affirmed the Order of the Regional Office
Issue:
Whether or not overtime pay, earnings and other remunerations are excluded as part of the basic
salary and not included in the computation of the 13th month pay?

Held:
Yes.
Under PD 851 and its implementing rules, the basic salary of an employee is used as the basis in
the determination of his 13th month pay. Any compensation or remunerations which are deemed not part of
the basic pay is excluded as basis in the computation of the mandatory bonus. Under PD 851s implementing
rules, overtime pay, earning and other remunerations are excluded as part of the basic salary and in
the computation of the 13th month pay.
The catch-all exclusionary phrase all allowances and monetary benefits which are not considered
or integrated as part of the basic salary shows the intention to strip basic salary of any and all additions
which may be in the form of allowances or fringe benefits.
The all-embracing phrase earnings and other remuneration which are deemed not part of the
basic salary includes within its meaning payments for sick, vacation, or maternity leaves. As such
they shall not be considered in the computation of the 13th month.

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211. PACIWU-TUCP vs. NLRC

G.R. No. 107994, 14 August 1995

Facts:

Petitioner union complaint for payment of 13th month pay to the drivers and conductors of respondent
company, on the ground that although said drivers and conductors are compensated on a purely commission
basis as described in their CBA, they are automatically entitled to the basic minimum pay mandated by law
should said commission be less than their basic minimum for eight (8) hours work.

Respondent Vallacar Transit, Inc. contended that since said drivers are compensated on a purely
commission basis, they are not entitled to 13th month pay pursuant to the exempting provisions enumerated
in paragraph 2 of the Revised Guidelines on the Implementation of the 13th Month Pay Law. Section of
Article XIV of the CBA expressly provides that drivers and conductors paid on a purely commission are
not legally entitled to 13th month pay. Said CBA, being the law between the parties, must be respected.

Issue:

WON the bus drivers and conductors of respondent Vallacar Transit, Inc. are entitled to 13th month pay.

Held:

Yes. For purposes of entitling rank and file employees for a 13th month pay, it is immaterial whether the
employees concerned are paid a guaranteed wage plus commission or a commission with guaranteed wage
inasmuch as the bottom line is that they receive a guaranteed wage. Thus it is correctly construed in the
MOLE Explanatory Bulletin No. 86-12.

The 13th month pay of bus drivers and conductors must be one-twelfth (1/12) of their total earnings during
the calendar year.

212. Philippine Duplicators vs. NLRC

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GR 110068 February 15, 1995

Facts:

Private respondent union, for and on behalf of its member-salesmen, asked petitioner corporation for
payment of 13th month pay computed on the basis of the salesmens fixed or guaranteed wages plus
commissions.

Petitioner corporation refused the unions request, but stated it would respect an opinion from the MOLE.
On 17 November 1987, acting upon a request for opinion submitted by respondent union, Director Augusto
G. Sanchez of the Bureau of Working Conditions, MOLE, rendered an opinion to respondent union
declaring applicable the provisions of Explanatory Bulletin No. 86-12, Item No. 5 (a):

. . . . Since the salesmen of Philippine Duplicators are receiving a fixed basic wage plus commission on
sales and not purely on commission basis, they are entitled to receive 13th month pay provided they worked
at least one (1) month during the calendar year. May we add at this point that in computing such 13th month
pay, the total commissions of said salesmen for the calendar year shall be divided by twelve (12). (Emphasis
supplied)

Notwithstanding Director Sanchez opinion or ruling, petitioner refused to pay the claims of its salesmen
for 13th month pay computed on the basis of both fixed wage plus sales commissions.

Issue:

WON sales commission is included in the coverage of basic salary for purposes of computing 13th month
pay.

Held:

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Article 97 (f) of the Labor Code defines the term wage (which is equivalent to salary, as used in P.D.
No. 851 and Memorandum Order No. 28) in the following terms:

(f) Wage paid to any employee shall mean the remuneration or earnings, however designated, capable of
being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission
basis, or other method of calculating the same, which is payable by an employer to an employee under a
written or unwritten contract of employment for work done or to be done, or for services rendered or to be
rendered, and includes the fair and reasonable value, as determined by the Secretary of Labor, of board,
lodging, or other facilities customarily furnished by the employer to the employee. Fair and reasonable
value shall not include any profit to the employer or to any person affiliated with the employer. (Emphasis
supplied)

In the instant case, there is no question that the sales commissions earned by salesmen who make or close
a sale of duplicating machines distributed by petitioner corporation constitute part of the compensation or
remuneration paid to salesmen for serving as salesmen, and hence as part of the wage or salary of
petitioners salesmen. Indeed, it appears that petitioner pays its salesmen a small fixed or guaranteed wage;
the greater part of the salesmens wages or salaries being composed of the sales or incentive commissions
earned on actual sales closed by them. No doubt this particular salary structure was intended for the benefit
of petitioner corporation, on the apparent assumption that thereby its salesmen would be moved to greater
enterprise and diligence and close more sales in the expectation of increasing their sales commissions. This,
however, does not detract from the character of such commissions as part of the salary or wage paid to each
of its salesmen for rendering services to petitioner corporation.

Hence, Petition and MR were dismissed.

213. San Miguel Corporation vs. Inciong

103 SCRA 139, 1981

FACTS:

On January 3, 1977, Cagayan Coca-Cola Free Workers Union, private respondent, filed a complaint against
San Miguel Corporation (Cagayan Coca-Cola Plant), alleging failure or refusal of the latter to include in

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the computation of 13th- month pay such items as sick, vacation or maternity leaves, premium for work
done on rest days and special holidays, including pay for regular holidays and night differentials. The
Regional Office No. 10 ruled in favor of the union which ordered herein petitioner to pay the difference
of whatever earnings and the amount actually received as 13th month pay excluding overtime premium and
emergency cost of living allowance. The order of the Regional Office was affirmed by herein public
respondent Deputy Minister Inciong in behalf of the Minister of Labor.

Public respondent's consistent stand on the matter since the effectivity of Presidential Decree 851 is that
"payments for sick leave, vacation leave, and maternity benefits, as well as salaries paid to employees for
work performed on rest days, special and regular holidays are included in the computation of the 13th-
month pay. On the other hand, pivate respondent cited innumerable past rulings, opinions and decisions
rendered by then Acting Labor Secretary Amado G. Inciong to the effect that, "in computing the mandatory
bonus, the basis is the total gross basic salary paid by the employer during the calendar year. Such gross
basic salary includes: (1) regular salary or wage; (2) payments for sick, vacation and maternity leaves; (3)
premium for work performed on rest days or holidays: (4) holiday pay for worked or unworked regular
holiday; and (5) emergency allowance if given in the form of a wage adjustment."

Petitioner contends that, Presidential Decree 851 speaks only of basic salary as basis for the determination
of the 13th-month pay. And that payments for sick, vacation, or maternity leaves, night differential pay, as
well as premium paid for work performed on rest days, special and regular holidays do not form part of the
basic salary.

ISSUE:

Whether or not payments for sick, vacation or maternity leaves, premium for work done on rest days and
special holidays, including pay for regular holidays and night differentials are included in the computation
of 13th-month pay under Presidential Decree 851.

RULING:

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The Court finds petitioner's contention meritorious. The Court cited the provisions of the law in dispute
which are Section 1 of Presidential Decree 851 and Section 2 of the Rules and Regulations.

Under Presidential Decree 851 and its implementing rules, the basic salary of an employee is used as the
basis in the determination of his 13th-month pay. Any compensations or remunerations which are deemed
NOT part of the basic pay is excluded as basis in the computation of the mandatory bonus.

Under the Rules and Regulations Implementing Presidential Decree 851, the following compensations are
deemed not part of the basic salary:

a) Cost-of-living allowances granted pursuant to Presidential Decree 525 and Letter of Instructions No.
174;

b) Profit sharing payments;

c) All allowances and monetary benefits which are not considered or integrated as part of the regular basic
salary of tile employee at the time of the promulgation of the Decree on December 16, 1975.

Under a later set of Supplementary Rules and Regulations Implementing Presidential Decree 851 issued by
the then Labor Secretary Blas Ople, OVERTIME PAY, EARNINGS AND OTHER REMUNERATIONS
ARE EXCLUDED AS PART OF THE BASIC SALARY AND IN THE COMPUTATION OF THE 13TH-
MONTH PAY.

The exclusion of cost-of-living allowances under Presidential Decree 525 and Letter of Instructions No.
174, and profit sharing payments indicate the intention to strip basic salary of other payments which are
properly considered as "fringe" benefits. Likewise, the catch-all exclusionary phrase "all allowances and
monetary benefits which are not considered or integrated as part of the basic salary" shows also the intention
to strip basic salary of any and all additions which may be in the form of allowances or "fringe" benefits.
Moreover, the Supplementary Rules and Regulations Implementing Presidential Decree 851 is even more
emphatic in declaring that earnings and other remunerations which are not part of the basic salary shall not
be included in the computation of the 13th-month pay.

While doubt may have been created by the prior Rules and Regulations Implementing Presidential Decree
851 which defines basic salary to include all remunerations or earnings paid by an employer to an employee,
this cloud is dissipated in the later and more controlling Supplementary Rules and Regulations which
categorically, exclude from the definition of basic salary earnings and other remunerations paid by
employer to an employee. A cursory perusal of the two sets of Rules indicates that what has hitherto been

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the subject of a broad inclusion is now a subject of broad exclusion. The Supplementary rules and
Regulations cure the seeming tendency of the former rules to include all remunerations and earnings within
the definition of basic salary.

The all-embracing phrase "earnings and other renumeration" which are deemed not part of the basic salary
includes within its meaning payments for sick, vacation, or maternity leaves. Maternity premium for works
performed on rest days and special holidays pays for regular holidays and night differentials. As such they
are deemed not part of the basic salary and shall not be considered in the computation of the 13th-month
they, were not so excluded, it is hard to find any "earnings and other remunerations" expressly excluded in
the computation of the 13th-month pay. Then the exclusionary provision would prove to be Idle and with
no purpose.

According to the Court, the conclusion finds basis in Section 87 and Section 93 of the Labor Code. It is
clear that overtime pay is an additional compensation other than and added to the regular wage or basic
salary, for reason of which such is categorically excluded from the definition of basic salary under the
Supplementary Rules and Regulations Implementing Presidential Decree 851.

It is likewise clear that premium for special holiday which is at least 30% of the regular wage is an additional
compensation other than and added to the regular wage or basic salary. For similar reason it shall not be
considered in the computation of the 13th- month

214. INSULAR HOTEL EMPLOYEES UNION-NF vs. WATERFRONT INSULAR HOTEL

DAVAO

G.R. No. 174040-41 September 22, 2010

FACTS:

Respondent Waterfront Insular Hotel Davao sent the Department of Labor and Employment (DOLE),
Region XI, Davao City, a Notice of Suspension of Operations notifying the same that it will suspend its
operations for a period of six months due to severe and serious business losses. In said notice, respondent
assured the DOLE that if the company could not resume its operations within the six-month period, the
company would pay the affected employees all the benefits legally due to them. During the period of the
suspension, Domy R. Rojas (Rojas), the President of Davao Insular Hotel Free Employees Union
(DIHFEU-NFL), the recognized labor organization in Waterfront Davao, sent respondent a number of
letters asking management to reconsider its decision. In a letter dated November 8, 2000, Rojas intimated
that the members of the Union were determined to keep their jobs and that they believed they too had to
help respondent. In another letter dated November 20, 2000, Rojas sent respondent more proposals as a

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form of the Union's gesture of their intention to help the company. It is understood that with the suspension
of the CBA renegotiations, the same existing CBA shall be adopted and that all provisions therein shall
remain enforced except for those mentioned in this proposal. These proposals shall automatically supersede
the affected provisions of the CBA. In a handwritten letter dated November 25, 2000, Rojas once again
appealed to respondent for it to consider their proposals and to re-open the hotel. In said letter, Rojas stated
that manpower for fixed manning shall be one hundred (100) rank-and-file Union members instead of the
one hundred forty-five (145) originally proposed. Finally, sometime in January 2001, DIHFEU-NFL,
through Rojas, submitted to respondent a Manifesto concretizing their earlier proposals.

After series of negotiations, respondent and DIHFEU-NFL, signed a Memorandum of Agreement (MOA)
wherein respondent agreed to re-open the hotel subject to certain concessions offered by DIHFEU-NFL in
its Manifesto. Accordingly, respondent downsized its manpower structure to 100 rank-and-file employees
as set forth in the terms of the MOA. Moreover, as agreed upon in the MOA, a new pay scale was also
prepared by respondent. The retained employees individually signed a "Reconfirmation of Employment"
which embodied the new terms and conditions of their continued employment. Each employee was assisted
by Rojas who also signed the document.

On June 15, 2001, respondent resumed its business operations. On August 22, 2002, Darius Joves (Joves)
and Debbie Planas, claiming to be local officers of the National Federation of Labor (NFL), filed a Notice
of Mediation before the National Conciliation and Mediation Board (NCMB), Region XI, Davao City. In
said Notice, it was stated that the Union involved was "DARIUS JOVES/DEBBIE PLANAS ET AL.,
National Federation of Labor." The issue raised in said Notice was the "Diminution of wages and other
benefits through unlawful Memorandum of Agreement."

On August 29, 2002, the NCMB called Joves and respondent to a conference to explore the possibility of
settling the conflict. In the said conference, respondent and petitioner Insular Hotel Employees Union-NFL
(IHEU-NFL), represented by Joves, signed a Submission Agreement wherein they chose AVA Alfredo C.
Olvida (AVA Olvida) to act as voluntary arbitrator. Submitted for the resolution of AVA Olvida was the
determination of whether or not there was a diminution of wages and other benefits through an unlawful
MOA. In support of his authority to file the complaint, Joves, assisted by Atty. Danilo Cullo (Cullo),
presented several Special Powers of Attorney (SPA) which were, however, undated and unnotarized. On
September 16, 2002, a second preliminary conference was conducted in the NCMB, where Cullo denied
any existence of an intra-union dispute among the members of the union. Cullo, however, confirmed that
the case was filed not by the IHEU-NFL but by the NFL. When asked to present his authority from NFL,
Cullo admitted that the case was, in fact, filed by individual employees named in the SPAs. The hearing
officer directed both parties to elevate the aforementioned issues to AVA Olvida. The case was docketed
as Case No. AC-220-RB-11-09-022-02 and referred to AVA Olvida. Respondent again raised its objections,
specifically arguing that the persons who signed the complaint were not the authorized representatives of
the Union indicated in the Submission Agreement nor were they parties to the MOA. AVA Olvida directed
respondent to file a formal motion to withdraw its submission to voluntary arbitration.

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ISSUE:

WON Article 100 of the Labor Code applies only to benefits already enjoyed at the time of the promulgation
of the Labor Code.

HELD:

No.

Article 100 of the Labor Code provides:

PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS Nothing in this Book

shall be construed to eliminate or in any way diminish supplements, or other employee benefits being
enjoyed at the time of the promulgation of this Code. Clearly, the prohibition against elimination or
diminution of benefits set out in Article 100 of the Labor Code is specifically concerned with benefits
already enjoyed at the time of the promulgation of the Labor Code. Article 100 does not, in other words,
purport to apply to situations arising after the promulgation date of the Labor Code.

215. DAVAO INTEGRATED PORT STEVEDORING SERVICE vs. ABARQUEZ

GR No. 102132, March 19, 1993

FACTS:

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Petitioner and private respondent, THE ASSOCIATION OF TRADE UNIONS (ATU-TUCP), entered into
a CBA providing for 2 sections on sick leave with pay benefits which apply to both the regular non-
intermittent workers or those workers who render a daily eight-hour service to the company as governed
by Section 1, Article VIII of the 1989 CBA, and the intermittent field workers who are members of the
regular labor pool and the present regular extra labor pool, as governed by Sec. 3 thereof.

Sec. 1, however, of said CBA had a proviso that only those regular workers of the company whose work
are not intermittent, are entitled to the commutation of sick leave privilege.A proviso not found in Sec. 3.
This caused the new assistant manager to discontinue the commutation of the unenjoyed portion of the sick
leave with pay benefits of the intermittent workers or its conversion to cash.

The Union objected and brought the matter for voluntary arbitration before the National Conciliation and
Mediation Board with respondent Abarquez acting as voluntary arbitrator who later issued an award in
favor of the Union. Hence, the instant petition.

ISSUE:

WON intermittent(irregular) workers are entitled to commutation of their unenjoyed sick leave with pay
benefits.

HELD:

Yes.

The CBA has two (2) sections on sick leave with pay benefits which apply to two (2) distinct classes of
workers in petitioners company, namely: (1) the regular non-intermittent workers or those workers who
render a daily eight-hour service to the company and (2) intermittent field workers who are members of the
regular labor pool and the present regular extra labor pool.

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Sick leave benefits, like other economic benefits stipulated in the CBA such as maternity leave and vacation
leave benefits, among others, are by their nature, intended to be replacements for regular income which
otherwise would not be earned because an employee is not working during the period of said leaves. They
are non-contributory in nature, in the sense that the employees contribute nothing to the operation of the
benefits. By their nature, upon agreement of the parties, they are intended to alleviate the economic
condition of the workers

216. Nestle Philippines, Inc. vs. NLRC

G.R. No. 91231, February 4, 1991

Facts:

Four (4) collective bargaining agreements separately covering the petitioner's employees in its
Alabang/Cabuyao factories; Makati Administration Office. (Both Alabang/Cabuyao factories and Makati
office were represented by the respondent, Union of Filipro Employees [UFE]); Cagayan de Oro Factory
represented by WATU; and Cebu/Davao Sales Offices represented by the Trade Union of the Philippines
and Allied Services (TUPAS), all expired on June 30, 1987. UFE was certified as the sole and exclusive
bargaining agent for all regular rank-and-file employees at the petitioner's Cagayan de Oro factory, as well
as its Cebu/Davao Sales Office. In August 1987, while the parties, were negotiating, the employees at
Cabuyao resorted to a "slowdown" and walk-outs prompting the petitioner to shut down the factory.
Marathon collective bargaining negotiations between the parties ensued. On September 1987, the UFE
declared a bargaining deadlock. On September 8, 1987, the Secretary of Labor assumed jurisdiction and
issued a return to work order. In spite of that order, the union struck, without notice, at the
Alabang/Cabuyao factory, the Makati office and Cagayan de Oro factory on September 11, 1987 up to
December 8, 1987. The company retaliated by dismissing the union officers and members of the negotiating
panel who participated in the illegal strike. The NLRC affirmed the dismissals on November 2, 1988. On
January 26, 1988, UFE filed a notice of strike on the same ground of CBA deadlock and unfair labor
practices. However, on March 30, 1988, the company was able to conclude a CBA with the union at the
Cebu/Davao Sales Office, and on August 5, 1988, with the Cagayan de Oro factory workers. The union
assailed the validity of those agreements and filed a case of unfair labor practice against the company on
November 16, 1988. After conciliation efforts of the NCMB yielded negative results, the dispute was
certified to the NLRC. The NLRC issued a resolution on June 5, 1989, whose pertinent disposition
regarding the union's demand for liberalization of the company's retirement plan for its workers. the NLRC
issued a resolution denying the motions for reconsideration. With regard to the Retirement Plan, the NLRC
held that Anent management's objection to the modification of its Retirement Plan, the plan is specifically
mentioned in the previous bargaining agreements thereby integrating or incorporating the provisions thereof
to the agreement. By reason of its incorporation, the plan assumes a consensual character which cannot be
terminated or modified at will by either party. Consequently, it becomes part and parcel of CBA
negotiations. Petitioner alleged that since its retirement plan is non-contributory, Nestle has the sole and

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exclusive prerogative to define the terms of the plan because the workers have no vested and demandable
rights, the grant thereof being not a contractual obligation but merely gratuitous. At most the company can
only be directed to maintain the same but not to change its terms. It should be left to the discretion of the
company on how to improve or modify the same.

Issue:

Whether or not the workers have vested and demandable rights over the retirement plan.

Ruling:

The Court ruled that employees have a vested and demandable right over the retirement plan. The inclusion
of the retirement plan in the collective bargaining agreement as part of the package of economic benefits
extended by the company to its employees to provide them a measure of financial security after they shall
have ceased to be employed in the company, reward their loyalty, boost their morale and efficiency and
promote industrial peace, gives "a consensual character" to the plan so that it may not be terminated or
modified at will by either party.

217. Globe Mackay Cable and Radio Corp. vs NLRC, 163 SCRA 71; G.R.
No. L-74156

(Labor Standards COLA, payment of wage in unworked days)

Facts: Wage Order No. 6 increased the cost-of-living allowance (COLA) of non-agricultural
workers in the private sector.
Petitioner Corporation complied with said Order by paying its monthly-paid employees the
mandated P3.00 per day COLA. In its computation, Petitioner Corporation multiplied the P3.00
daily COLA by 22 days, which is the number of working days in the company.

Respondent Union disagreed with the computation alleging that prior to the effectivity of the Wage
Order, Petitioner Corporation had been computing and paying the COLA on the basis of 30 days
per month and that this constituted an employer practice, which should not be unilaterally
withdrawn.

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 Labor Law Complete Case Digest

The Labor Arbiter sustained the position of Petitioner Corporation by holding that the monthly
COLA should be computed on the basis of 22 days, since the evidence showed that there are
only 22 days in a month for monthly-paid employees in the company.

The NLRC reversed the Labor Arbiter on appeal, holding that Petitioner Corporation was guilty
of illegal deductions considering that COLA should be paid and computed on the basis of 30 days
since workers paid on a monthly basis are entitled to COLA on days unworked; and the full
allowance enjoyed by Petitioner Corporations monthly-paid employees before the CBA executed
between the parties constituted voluntary employer practice, which cannot be
unilaterally withdrawn.

Issue: WON the computation and payment of COLA on the basis of 30 days per month constitute
an employer practice which should not be unilaterally withdrawn.
Held: No. Section 5 of the Rules Implementing Wage Orders Nos. 2, 3, 5 and 6 provides that all
covered employees shall be entitled to their daily living allowance during the days that they are
paid their basic wage, even if unworked. The primordial consideration for entitlement of COLA is
that basic wage is being paid. The payment of COLA is mandated only for the days that the
employees are paid their basic wage, even if said days are unworked. On the days that employees
are not paid their basic wage, the payment of COLA is not mandated.
Moreover, Petitioner Corporation cannot be faulted for erroneous application of a doubtful or
difficult question of law. Since it is a past error that is being corrected, no vested right may be said
to have arisen nor any diminution of benefit under Article 100 of the Labor Code may be said to
have resulted by virtue of the correction.

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